Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

STATIONERS AND NEWSPAPER MAKERS' COMPANY BILL

Read the Third time and passed.

Oral Answers to Questions — AGRICULTURE, FISHERIES AND FOOD

Fishing Industry

Mr. Hector Hughes: asked the Minister of Agriculture, Fisheries and Food if he is aware of the difficulties caused to the fishing industry by the present high cost of fishing gear; and what steps, by way of subsidy or otherwise, he plans to mitigate the loss and damage thereby caused to the fishing industry.

The Minister of Agriculture, Fisheries and Food (Mr. Christopher Soames): As the hon. and learned Member knows, subsidy is already paid to a large part of the industry. The subsidy rates are reviewed annually in the summer. The cost of fishing gear is one of the factors taken into account and this review will be taking place again later this year.

Mr. Hughes: I know what the Minister has said, but does he not agree that in the case of tools and equipment for a productive industry such as the fishing industry there should be special mitigations with a view to reaping economic and other benefits for the nation? Will he now intercede with the Chancellor of the Exchequer at this particular time to see that special mitigations are accorded to the fishing industry?

Mr. Soames: As the hon. and learned Gentleman knows, this is reviewed every

year. All costs are taken into account. The cost of fishing gear represents between 2 per cent. and 12 per cent. of the total cost, varying with the different types of fishing that is done. I do not consider that it is necessary for me to do any special interceding, as I am confident that the Government will come forward with what is right, proper and fair.

Engholm Committee (Recommendations)

Mr. Farr: asked the Minister of Agriculture, Fisheries and Food whether he is now in a position to implement the recommendations of the Engholm Committee; and if he will make a statement.

Mr. Soames: With my right hon. Friend the Secretary of State for Scotland and my right hon. Friend the Secretary of State for the Home Department, I am closely studying this Committee's proposals in the light of views submitted by the organisations representing the various interests concerned. I hope before long to make a statement on the Government's intentions.

Mr. Farr: I thank my right hon. Friend for that reply, but may I remind him that it is almost the same as the reply I received about five months ago to a similar Question? May I further remind him that it is very urgent to get some legislation on the go now to protect our plant and seed breeders from pirating of varieties?

Mr. Soames: If my hon. Friend asked a Question five months ago, it must have been very shortly after I had received the Report. Having received the Report, I took the right procedure of sending it to interested parties to get their comments. I asked for their comments by February of this year, which gave them a reasonable time. This is an important matter, and they wanted time to think about it. We received all the comments last month, and it remains now for me to examine the Report against the background and in the light of those comments. I hope that it will not be very much longer before I shall be able to give the House the result of our considerations, but I do not think that I can accept it as being unreasonably long.

Mr. B. Harrison: Will my right hon. Friend consider specifying a date prior


to the legislation from which it will be possible retrospectively to claim royalties if the House approves legislation on this matter?

Mr. Soames: I will consider what my hon. Friend said, but I know that he would not expect me to commit myself in any way this afternoon.

Pigs

Mr. Ridley: asked the Minister of Agriculture, Fisheries and Food if he will give the cost, per pig, of all the pig subsidies paid for grade and deadweight baconers and other pigs, respectively, in the subsidy year 1960–61.

The Joint Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. W. M. F. Vane): The average rate of guarantee payment is estimated to be about 6s. 7d. per score deadweight on baconers and about 4s. 11d. per score deadweight on other pigs. In addition, quality premiums averaging about 1s. 5d. per score have been paid on grade and deadweight baconers.

Mr. Ridley: Can my hon. Friend say why one class of pig should be subsidised at a higher rate than another? Is he convinced that this is in the long-term interests of securing economic British bacon production?

Mr. Vane: My hon. Friend will know that there is essentially the same subsidy for all pigs, but in this country we have two separate markets—the pork market and the bacon market. It has happened recently that, since the returns of the pork market have been better, so the producers of the pork pigs have been making less of a call on the subsidy and support arrangements.

Forestry

Mr. Worsley: asked the Minister of Agriculture, Fisheries and Food (1) what estimates the Forestry Commission has made of the total production of its forests in the years 1965, 1970, 1975, and 1980, respectively;
(2) what estimates the Forestry Commission has made of the total production of all woodlands in the United Kingdom in the years 1965, 1970, 1975, and 1980, respectively.

Mr. Soames: The Commission make long-term estimates of production at five-yearly intervals. The last was made in 1955 for the years 1965 and 1975; the 1960 estimates, which are now being prepared and will take us up to 1980, will be made available as soon as possible. The 1955 estimate, which is, of course, subject to revision, for total production for all woodlands and hedgerows in Great Britain is 92 million hoppus feet for 1965 and 125 million for 1975. From the Commission's own forests the current estimate is 30 million hoppus feet in 1965 and 55 million in 1975.

Mr. Worsley: I thank my right hon. Friend for that reply. Does not he agree that these increases are very remarkable, and indicate that both sides of the industry are doing their best to increase production? Does not he also agree that the increases will create problems? Will he study these problems and, in particular, help the timber trade in any way he can to solve them?

Mr. Soames: I agree with my hon. Friend. These are satisfactory figures, which reflect great credit on the timber growers. We will have to be careful to ensure that there are proper outlets, in order to see that supply does not exceed demand. The Commission is constantly investigating new outlets, such as pulp mills and board mills, for homegrown timber, and I do not think that there is any reason to suppose that supply will exceed demand in the end.

Barley

Mr. de Freitas: asked the Minister of Agriculture, Fisheries and Food whether he will now make a statement on the calling of a conference of all the barley exporting countries.

Mr. Soames: Though at first sight attractive, a conference limited to barley-exporting nations would be open to obvious objections of private fixing and the like. So importing countries as well as exporting countries would have to participate. Moreover, the conference would have to cover other feed grains as well as barley. It would, in my view, be fruitless to press for such a conference unless there was a reasonable prospect of a successful outcome. The propects


of this appear no better now than on previous occasions when this suggestion has been considered.

Mr. de Freitas: Although the weather and the Price Review have gone some way towards solving or mitigating our own domestic problem, is there not still a formidable world problem in barley? If the Minister will not call such a conference, what is he going to do about it?

Mr. Soames: We have been living and working with a free coarse grain trade for many years, and we consider that this is the right way to proceed.

Lime

Mr. P. Browne: asked the Minister of Agriculture, Fisheries and Food what difference there has been in the amount of subsidy paid in respect of lime and its spreading since the higher contribution for summer liming was abandoned in favour of a flat rate all the year round.

Mr. Vane: The estimated subsidy expenditure for the year 1960–61, which finishes at the and of this month, is £81 million in respect of about 5½ million tons of lime. For the previous year the figures were £11 million in respect of 7 million tons of lime. The main reason for this fall was the very wet season which set in from the summer of last year and which hampered liming and, indeed, most farming operations.

Rhinoceroses

Mr. Rankin: asked the Minister of Agriculture, Fisheries and Food how many rhinoceroses were imported into this country for zoos under Government licences in 1959 and 1960.

Mr. Vane: My right hon. Friend is not concerned with rhinoceroses.

Mr. Rankin: I am sorry to hear that, in view of the fact that he is concerned with the importation of other forms of wild life into this country. In view of the blundering acts of one of his colleagues, will not he try to extend his activities to cover rhinoceroses?

Mr. Vane: I can set the hon. Member's mind at rest. No rhinoceros-borne diseases are a serious hazard to our own livestock. Hence the rhinoceros comes under a different category from the other animals about which the hon. Member asked Questions recently.

Rabbit Clearance Areas

Mr. A. Roberts: asked the Minister of Agriculture, Fisheries and Food what is the cost to his Department of maintaining rabbit clearance areas; and what is the approximate amount by which the agricultural industry benefits from such action.

Mr. Vane: The Department's grants to rabbit clearance societies will amount to about £150,000 in this financial year. It is not possible to assess the benefit to agriculture from their operations.

Mr. Roberts: Is the Minister aware that it was alleged that the denuding of the countryside of rabbits would result in a saving of £1 million to the agricultural industry? If that is assumed to be the case, where has this saving reflected itself? Is it in the wages of the agricultural worker, or in his working conditions?

Mr. Vane: There is little doubt—and anybody who knows the countryside well will bear me out in this—that the rabbit caused a very great deal of damage. No one wants to see it return. The disappearance of the rabbit has been reflected in greatly increased agricultural production in this country.

Mr. de Freitas: Will the hon. Gentleman take this opportunity of giving some credit to the agricultural co-operative organisations, which were entirely responsible far this clearance scheme?

Mr. Vane: I would not have thought that any one person or type of organisation could claim to be responsible for the disappearance of the rabbit from this country. Some of us have heard of myxomatosis, which has done nearly as much as the rabbit clearance societies, but all who have taken part in this valuable work deserve great credit.

Bread

Mr. Lipton: asked the Minister of Agriculture, Fisheries and Food whether he will now put into effect the recommendations of the Food Standards Committee on the quality of bread.

Mr. Soames: I have received many representations on the Food Standards Committee's Report on Bread and Flour and am considering them.

Mr. Lipton: Zero hour was on 17th February last, well over a month ago. When shall we get something better than the doped cotton wool which now passes for bread? This matter has been going on for many years now. Are the Government going to do something about it?

Mr. Soames: I cannot accept in any way the implication contained in the hon. Member's supplementary question. As to the timing of the matter, as I told him when he last asked a Question on this subject, I asked for reports to be in by 17th February. That has been done. The reports will be considered, and I hope to be able to make a statement fairly shortly.

Beef

Sir A. Hurd: asked the Minister of Agriculture, Fisheries and Food how much the 17 per cent, of the United Kingdom's beef supplies imported from Argentina represented in weight and value last year; what is the estimated saving in cost, compared with home-produced meat; and what has been the average cost of dealing with foot-and-mouth disease outbreaks and paying compensation in the past five years.

Mr. Soames: Imports of beef from the Argentine in 1960 amounted to 204,000 tons, valued at £39 million, or £191 per ton. The guaranteed price for fat cattle to United Kingdom producers in that year was the equivalent of £285 per ton. Argentine imports, however, supplement rather than replace home production and, even with their help, beef consumption per head last year was well below the pre-war level. That is one of the reasons for the substantial increase in the guaranteed price for fat cattle following the Annual Price Review. Over the period 1956–60 compensation, together with the cost of slaughter, the disposal of carcases and the disinfection of premises has averaged just over £1 million per year.

Sir A. Hurd: I thank my right hon. Friend for that information. Has he noted that there was recently an outbreak of foot-and-mouth disease among pigs at a Royal Air Force station which uses Argentine beef? Has he further noticed from Answers given by his right hon. Friends representing Service Departments that they cannot say how much

Argentine beef is being used by the Service Departments. In view of what my right hon. Friend has said, will he give us that information? It seems that there may be a special risk attaching to the use of Argentine meat in Royal Air Force stations and Army units where personnel may not be as careful as they should be to sterilise the remains of food before feeding it to the pigs.

Mr. Soames: I am sure that my colleagues' attention will be drawn to the Question which my hon. Friend has put. I shall certainly make sure that their attention is drawn to it. As to the fact that they could not say what amount of Argentine beef was consumed by each Service, I understand that although the meat has to reach certain standards, it is left to the contractor to decide from what source the beef comes.

Cheese

Mr. Lipton: asked the Minister of Agriculture, Fisheries and Food what action he is taking to encourage the production of improved British cheese, especially Cheddar.

Mr. Vane: With the encouragement of the Department, the industry in England and Wales operates grading schemes for both farmhouse and creamery cheese, including Cheddar cheese. Market prices generally reflect the gradings obtained, so that producers already have an incentive to improve the quality of their cheese.

Mr. Lipton: Is not the hon. Gentleman aware that the higher price ranges of the market are dominated by foreign imported cheeses? When shall we be able to get the good, well-matured British Cheddar which we used to get years ago?

Mr. Vane: I think the standards of of British cheeses are steadily rising. Though some people may not think British cheeses compare with some of the imported cheeses, others will say that they are just as good or even better. In the end, there is no accounting for taste.

Agricultural Industry (National Income)

Mr. de Freitas: asked the Minister of Agriculture, Fisheries and Food whether he is aware that over the last


10 years the proportion of the national income received by the agricultural industry has steadily declined; and what steps he is taking to stop this decline.

Mr. Soames: Yes, Sir. This is inevitable because with the increasing prosperity which the country has enjoyed these last 10 years the demand for other goods and services had risen faster than the demand for food. But the agricultural industry is in a sound condition and if any evidence were needed that the Government are determined to keep it so the recent Price Review provides it.

Mr. de Freitas: Would not it be very right and proper if the Minister, on behalf of the Government, told the members of the agricultural industry that it clearly is not true to say they have never had it so good?

Mr. P. Browne: Can my right hon. Friend say what is the income per head in agriculture compared with that of other industries, in this country, in France and, say, in the United States of America?

Mr. Soames: Yes, Sir, because the Food and Agriculture Organisation of United Nations conducted an inquiry into this a year or two ago, country by country. The proportion per head in agriculture for the United Kingdom was 80 per cent.; for France 60 per cent. and for Western Germany 70 per cent.

Mr. Peart: Is the Minister aware that the Government have actually legislated over a period for declining incomes and that the position of small farmers has deteriorated since they came to office?

Mr. Soames: No, it is the case throughout the Western world that as prosperity increases and income levels have been rising the amount spent on food is a lesser proportion than on consumer goods. This applies to Belgium, Denmark, Western Germany, the Netherland, Canada and the United States.

Oral Answers to Questions — TRADE AND COMMERCE

Money Deposits

Mr. du Cann: asked the President of the Board of Trade if he will make a further statement about Her Majesty's Government's proposals for regulating

the solicitation of money deposits by companies from members of the public by advertisement and circulars.

Mr. Leather: asked the President of the Board of Trade whether he is yet in a position to make a statement regarding the control of companies soliciting money from the public without security.

The President of the Board of Trade (Mr. Reginald Maudling): Work on a Bill for the regulation of companies which invite deposits from the public is proceeding and it may be possible to introduce it later this Session.

Mr. du Cann: I thank my right hon. Friend for that reply. In view of the fact that legislation in the current Session of Parliament was promised over a year ago and in the meantime a large number of depositors have apparently lost money by investing in some of these companies, will he do his utmost to make absolutely certain that a Bill is brought forward in the current Session?

Mr. Maudling: I will proceed as fast as possible, but it is difficult to draft legislation to deal with this mischief without at the same time interfering with normal and proper methods of business.

Mr. Leather: I thank my right hon. Friend for his reply. Can he tell us whether in this Bill he will try to include not only the soliciting of money for deposits but, what is equally as bad and happens over a wide field, the soliciting of money for investments?

Mr. Maudling: I think the question of soliciting money for the sale or purchase of shares is covered by existing legislation and by the Jenkins Committee. Regarding deposits, it will certainly cover the whole field.

Mr. Leather: Is my right hon. Friend aware that in fact there are a number of small firms of stockbrokers, not in London but scattered over the provinces, who solicit money by post for very chancy investments, which is one of the abuses we are trying to stop?

Mr. Maudling: If my hon. Friend will let me have details, I shall be glad to look into the matter.

Hire Purchase

Mr. Wade: asked the President of the Board of Trade whether, in view of the attempts still being made to circumvent the law relating to penalties in hire-purchase agreements by provisions for compensation for depreciation, he will now introduce legislation to prevent this practice.

Mr. Maudling: The Committee on Consumer Protection has announced its intention of considering whether there should be further control of the terms of hire-purchase and credit-sale agreements. I would prefer to await their report.

Mr. Wade: As the particular case which I have in mind relating to a motor car hire-purchase agreement is sub judice I cannot comment on it. May I ask the right hon. Gentleman to watch the position carefully with a view to introducing amending legislation?

Mr. Maudling: I will certainly watch it carefully. I know the case in question, which, as the hon. Gentleman rightly says, is sub judice.

Mr. Darling: In view of the increasing number of references to the Malony Committee, would the President consider asking that Committee to publish interim reports, because if we are to wait for a comprehensive report covering all these things we shall have to wait for another two or three years?

Mr. Maudling: I do not think the hon. Member need be quite so concerned. I do not think it is a question of an increasing number of references but of an increasing number of questions disclosing what the Committee is doing.

Intertype

Mr. Dugdale: asked the President of the Board of Trade why he authorises Intertype, a wholly-owned American subsidiary in the United Kingdom, to instruct purchasers from some other countries wishing to buy its products to purchase them in the United States of America.

Mr. Maudling: There is no question of my authorising or not authorising the actions of a private firm. The firm has a long order book and an excellent export record.

Mr. Dugdale: Is the right hon. Gentleman aware that a letter such as I have described was sent by a wholly-owned American subsidiary to a firm wishing to buy these products and that the firm was instructed to buy in America at an extra cost of 5,000 dollars? Does he think this right? In view of the increasing number of wholly-owned subsidiary companies in this country, including Henry Ford, does he think it is right that such letters should be sent out, thus depriving British firms of work which otherwise they might do?

Mr. Maudling: A firm can never instruct inquirers to buy somewhere else. This firm has and is consistently exporting over 60 per cent. of its output, which is a magnificent export record. It has a long order book and it is only reasonable that it should tell an inquirer that if he felt like it and wanted goods at an earlier date he could go elsewhere. That is only fair and reasonable, and as I say, this firm has an excellent record in exports.

Decimal Currency

Mr. Proudfoot: asked the President of the Board of Trade what consideration he has given to the advantages and disadvantages of a duodecimal system in so far as it would affect the United Kingdom export trade.

Mr. Maudling: I assume that my hon. Friend is referring to currency and I cannot add to the assurance my right hon. Friend the Minister of State gave him on 21st February that export considerations will be taken into account in the Government consideration of the question of adopting a decimal currency.

Mr. Proudfoot: Does my right hon. Friend realise that if we adopted the duodecimal system we should be the only country using it and that it would seriously damage exports?

Mr. Maudling: I am told that the last people to use the duodecimal system were the Babylonians, and I doubt whether we shall go back to that.

European Free Trade Association (Consultative Committee)

Mr. Oram: asked the President of the Board of Trade whether he will propose that the Consultative Committee


to be set up by the European Free Trade Association, comprising trade union, employer and financial interests shall be enlarged to include representatives of the interests of organised distributors and consumers as well.

Mr. Maudling: This Committee is designed to be a relatively small body of people who, acting as advisers in their personal capacity to the Council of the European Free Trade Association, will as a whole represent the main sectors of economic life in the member states. I am satisfied that the Committee as now composed will fulfil this purpose and I should not wish to suggest any addition to its numbers.

Mr. Oram: Do not the categories mentioned in my Question, namely, organised distributors and consumers, come within the definition of main sectors of economic life? Since, as the Minister has said, the formal decision says that the main sectors of economic life shall be represented, ought not these categories also to be represented?

Mr. Maudling: If we start representing every sector—

Mr. Oram: No, only the main sectors.

Mr. Maudling: —we shall run into immense problems. I am glad to say that one representative is Mr. Birch of U.S.D.A.W., who will, I hope, soon be well enough to take up his duties.

Poland

Sir H. Legge-Bourke: asked the President of the Board of Trade what steps he is taking to improve the unfavourable balance of trade with Poland, especially in view of the fact that the value of meat, butter and dairy products imported from Poland exceeds that of all imports into Poland from the United Kingdom.

Mr. Maudling: The unfavourable balance of trade to which my hon. Friend refers is one element in a payments position with Poland which is in favour of the sterling area as a whole and it would not be in our interests to try to balance our visible trade with Poland while ignoring other relevant factors.

Sir H. Legge-Bourke: Does not my right hon. Friend realise that the total

value of British exports taken up by Poland is only just over £12 million, whereas the total value of agricultural imports, particularly meat and dairy products—largely pigs and pork—exceeds £18 million? When we are having to put up the guaranteed price for British producers in the Annual Price Review, does this make sense?

Mr. Maudling: Visible exports are only part of the story. There are many invisibles, such as freight, insurance and debt repayments from Poland to the United Kingdom. Poland is short of sterling and uses currency obtained from trade with other countries to buy sterling to purchase within the sterling area.

Nenthead

Mr. Speir: asked the President of the Board of Trade whether, as Haltwhistle has been declared a designated area under the Local Employment Act, 1960, and Nenthead, which has a very high proportion of its male population unemployed, comes within the boundaries of the Haltwhistle exchange employment area, he will consult the Chairman of the National Coal Board about the effect of his refusal to issue a licence to permit the opening at Nenthead of a small semi-anthracite mine to provide employment for between 10 and 20 men.

Mr. Maudling: While I should like to see employment provided in this area, the licensing of this mine is a matter for the National Coal Board.

Mr. Speir: While appreciating that Answer, may I ask my right hon. Friend whether he is not responsible for the implementation of the Local Employment Act? Does he realise the absurdity of a situation in which there is a shortage of anthracite and semi-anthracite and when some representatives of the National Coal Board are talking about a shortage of miners, while in other areas, such as this, which have a high level of unemployment, the Board prevents the opening up of a very small mine? Is he aware that this is not the only one, and that there are other cases?

Mr. Maudling: I am sure that the Chairman of the National Coal Board will have these factors very much in mind and that my hon. Friend's Question will serve to make them more publicly known.

East Germany (Order)

Mr. Rankin: asked the President of the Board of Trade why the Exports Credits Guarantee Department rejected the East German Government's order for steel rolling mills and certain other steel-making equipment.

Mr. Maudling: I would refer the hon. Member to the reply given by my right hon. Friend the Minister of State to the hon. Member for West Ham, North (Mr. A. Lewis) on 21st March.

Mr. Rankin: I am terribly sorry, but I have not seen that reply. May I ask the right hon. Gentleman to repeat it for my benefit and for the benefit of the House? Will he do so?

Mr. Maudling: The facts are that—
—discussions on this project between the East German authorities and a United Kingdom firm are continuing.
As my right hon. Friend the Minister of State said, I would not—
—wish to comment further on business which is still under negotiation."—[OFFICIAL REPORT, 21st March, 1961; Vol. 637, c. 33.]

Mr. Rankin: I am glad to know that the reports which were so widely spread a few days ago—I think last week—are not wholly accurate. Can I deduce from the right hon. Gentleman's reply that he is now taking a more sensible attitude towards trade with East Germany and that he has found a "Stout Cortez" in his ranks and has discovered and given existence to a country which the Government have so far failed to recognise?

Mr. Maudling: Having quite rightly stated that certain newspaper reports were inaccurate, the hon. Gentleman now bases his supplementary question on the supposition that they were accurate.

Leipzig Fair

Mr. Gower: asked the President of the Board of Trade how many British firms participated in the Leipzig Fair, 1961; what increase this represented over the previous fair; and what reports he has received of business done and inquiries received.

Mr. Maudling: As my right hon. Friend the Minister of State said on 28th February, we are informed that 225 British

firms exhibited; this total represents an increase of more than 55 per cent. over the corresponding figure for 1960. Preliminary information I have received indicates that most United Kingdom exhibitors were satisfied with the results they achieved and with the contacts made with senior representatives of Communist countries. In a few instances, disappointment has been expressed that some exhibits specifically requested by the East German authorities have not been sold and may have to be returned to the United Kingdom.

Mr. Gower: While my right hon. Friend cannot intervene, for obvious reasons, at Government level, will he take account of the complaints, some of which I have received myself, about the siting and nature of the British pavilions, which were most inadequate, unflattering and unhelpful to effective exhibition by many British firms, who this year attempted to expand their exports in this direction? While he cannot intervene with the East German authorities, will he somehow or other give help and advice to our industrialists on what can be done?

Mr. Maudling: The reports I have seen show that many of our industries, particularly the steel industry, put up very effective exhibitions indeed. So far as I am concerned, the more trade we do with East Germany the better.

Mr. Lee: Is the right hon. Gentleman aware that this is becoming something of a farce, because when we go to see these fairs we find that most of the countries of the world are represented there—the United States and France and other Western powers—and that many of them have direct trade agreements with their own Governments, including, I think, Western Germany as well? Will he have a look at this matter again, instead of leaving it to the F.B.I., and also do something to facilitate air travel, because there was no direct B.E.A. flight from London, nor were any proper representations made by the Board of Trade? Cannot we have something done about that?

Mr. Maudling: Our practice in this matter is exactly the same as that of other N.A.T.O. countries. The hon. Member should not take at their face value all the stories which come from the other side of the Iron Curtain.

Butyl

Mr. Leather: asked the President of the Board of Trade why his Department has extended the suspension of Imperial Preference on butyl imported from Canada, which can once again supply all the requirements of British industry.

Mr. Maudling: Butyl rubber was temporarily exempted from import duty from 1st October, 1960, and, as a result, the Commonwealth margin of preference was suspended. The exemption comes to an end on 1st April, 1961, and will not be extended.

Mr. Leather: While thanking my right hon. Friend for that very satisfactory answer, may I ask him if he is aware that this industry in Canada was built up primarily during the war for the sole purpose of serving this country, but that powerful foreign interests have been trying very hard to undermine its position in the British market, which if they were allowed to succeed would be a complete negation of the spirit of the Ottowa Agreements? Can he assure the House that he will keep a weather eye on the position in the future?

Mr. Maudling: Certainly, Sir. We suspended the Commonwealth margin of preference and exempted this product from duty because for a certain period the Canadian output was insufficient to meet United Kingdom demand. As soon as we found that there was enough coming from Canada we restored the position.

Cotton Industry (Reorganisation Scheme)

Mr. Thornton: asked the President of the Board of Trade if the accounts of the realisation comparies established under the Cotton Industry Finishing Reorganisation Schemes will be available for scrutiny by the Comptroller and Auditor General.

Mr. Maudling: No, Sir. The realisation companies are companies limited by guarantee and have the normal obligation to file accounts with the Registrar of Companies where they are available for public inspection.

Mr. Thornton: Does that Answer mean that there is no accountability to Parliament for the spending of Treasury

funds, funds raised by private taxation or levy authorised by this House? Secondly, is the right hon. Gentleman aware that prices from two to three times the grant provided for under the formula in the Order have been agreed?

Mr. Maudling: The position of these realisation companies is that they have a free hand to decide how much they will apply, because the whole of the extra cost of this inducement to close down is borne by the industry. In these circumstances, it is right that they should be treated as companies limited by guarantee. In the case of the Cotton Board, the accounts and records will be available for inspection by the Comptroller and Auditor General.

Mr. Thornton: Is it not a fact that prices over and above that provided by Treasury grant are raised by a levy or by private taxation in the industry on firms remaining in the industry? In the case of the private levy authorised by Parliament, ought there not to be some accountability to Parliament for the money so raised?

Mr. Maudling: The position is that there is accountability to Parliament for public money. Where the money is provided not by the public but by the industry, companies' accounts are available for public inspection.

Factory Space, Fife

Mr. W. Hamilton: asked the President of the Board of Trade if he is aware that the Prinlaws Mills in Leslie, Fife, have been standing empty for a number of years and that this represents a high rating loss to the burgh of Leslie; and whether any offers have recently been made for the premises.

Mr. Maudling: The Board has so far received no enquiries for the premises.

Mr. Hamilton: Does the right hon. Gentleman realise that these premises have stood empty for quite a long while and that the Leslie Burgh Council, which is quite a small authority, can ill afford to lose the money involved? Does he further realise that the employment facilities in the area are in any case very restricted? In these circumstances, will he and his Department do everything


they can to advertise the very advantageous facilities offered by these mills and help the local authority to get a tenant?

Mr. Maudling: I should certainly be very happy to see a tenant taking over these mills. As far as advertising is concerned, the hon. Member is certainly helping in that direction.

Mr. W. Hamilton: asked the President of the Board of Trade how much factory space is currently lying idle in the county of Fife; and what steps are being taken to secure tenants.

Mr. Maudling: There is no obligation upon firms to report empty factory space to the Board of Trade, but the Controller for Scotland has knowledge of 423,080 square feet of factory space in Fife at present vacant. The Board continues to draw the attention of suitable industrialists to these empty premises.

Mr. Hamilton: Can the right hon. Gentleman say whether his advertising of these premises and others in the United Kingdom is any better than it was when the Estimates Committee reported on the complete inadequacy of the pamphlet issued by his Department to encourage foreign investors to come to this country? Is it not quite scandalous that there should be such an amount of factory space idle in Fife when the unemployment figures are so high?

Mr. Maudling: No, Sir. We are quite content to be judged by the number of new jobs being created in Scotland at the present moment.

Mr. Hamilton: I am asking about Fife.

Northumberland

Mr. Owen: asked the President of the Board of Trade what consideration he has given to the case for new industries submitted to him by the Northumberland County Council; what reply he has sent; and whether he will make a statement.

Mr. Maudling: As I have told the county council, I have carefully studied the case it submitted to me and welcome its initiative in seeking to attract new industry.

Mr. Owen: Promises of that character are of little encouragement to the county as a whole. Is the Minister aware that in January this year nearly 3 per cent. of the total registered insured people were unemployed? Is he further aware that, in the main, this is a mining area and that the future of that industry is not very encouraging? Will he take immediate steps to give some basic encouragement to the people of the area?

Mr. Maudling: One should not underestimate the prospect of the mining industry in this area. We keep in close touch with the National Coal Board about future plans. I should be happy to persuade other industrialists to go to the North-East, to Tyneside and Sunderland. We are getting a few to go, and I hope there will be more.

Mr. Owen: In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise the matter on the Adjournment.

Isle of Wight

Mr. Woodnutt: asked the President of the Board of Trade if, in view of the redundancies and anticipated redundancies at the shipbuilding yards of J. Samuel White and Company Limited, of Cowes, Isle of Wight, he will now consider further applications for assistance under the Development Areas Treasury Advisory Committee from organisations wishing to develop in the Isle of Wight.

Mr. Maudling: No, Sir. The jobs in prospect for the Isle of Wight should fully offset any unemployment which results from the redundancies to which my hon. Friend refers.

Mr. Woodnutt: Is my right hon. Friend aware that the implementation of the Local Employment Act in the Isle of Wight has been most successful so far? Is he also aware that 114 men received redundancy notices at Samuel White and Company this week and another 1,000 will do so before the end of the year? If I am able to prove to him that the statement he has just made is incorrect, will he reconsider his decision?

Mr. Maudling: Of course I would, but my information, which I think is accurate, is that unemployment on the island is nearly 1 per cent. lower than it was a year ago and more than 1,200 jobs are in prospect. I shall, of course, watch the situation very closely, but I think my hon. Friend is possibly being a little over gloomy about the prospects in the island.

Oral Answers to Questions — NATIONAL FINANCE

Linoleum (Tax)

Mr. Gourlay: asked the Chancellor of the Exchequer if he is aware of the unemployment in the linoleum industry, due to recession in the home market; and whether he will take this factor into account when he is considering the rate of Purchase Tax which may be imposed on linoleum in the future.

The Economic Secretary to the Treasury (Mr. Anthony Barber): I noticed the figures given by my right hon. Friend the Minister of Labour in reply to the hon. Member's Question on 20th March, but I cannot comment on the taxation aspect of this matter at this stage.

Mr. Gourlay: Is the Minister aware that the figures given by the Minister of Labour on Monday indicated that unemployment in the linoleum industry in Kirkcaldy is now five times greater than in January this year? Is he aware that the manufacture of linoleum in Kirkcaldy is as important to the economy of that town as the manufacture of cars is to the Midlands? Will he press on the Chancellor of the Exchequer the importance of giving most careful consideration, when preparing his Budget, to the necessity of abolishing or reducing the 12½ per cent. Purchase Tax on linoleum and thus helping and encouraging the home market?

Mr. Barber: I think the hon. Member will know that Purchase Tax on linoleum was reduced from 30 per cent. to 15 per cent. in 1957 and to 12½ per cent. in 1959. I appreciate his concern, and I am sure my right hon. and learned Friend will take into account what he said this afternoon.

Roads (Receipts and Expenditure)

Sir Richard Pilkington: asked the Chancellor of the Exchequer what, for

1961, is the estimated total taxation revenue derived from vehicles and vehicle drivers; and what, for 1961, will be the total Government expenditure on roads.

Mr. Barber: The latest available estimate relates to the financial year 1960–61. The figures are £645 million and £108 million, respectively. In addition, it is estimated that some £94 million will be spent on roads by local authorities, not counting about £25 million on lighting.

Sir Richard Pilkington: Is not the road user paying far more than his fair share of taxation? Would it not be very wrong to add tolls to the existing burden? Will the Treasury do what it can to speed up the creation of a proper road system in the country?

Mr. Barber: The question of tolls is another matter, but, as my hon. Friend realises, there is no connection between expenditure on roads and revenue derived from the road user. The revenue goes into the common pool and the amount spent on the roads depends on the assessment of the priorities having regard to the various demands on the country's economy.

Mr. Dudley Williams: Will my hon. Friend remember that the original idea behind the Road Fund was to create a fund which would be made use of to provide the roads of the country? May I repeat what my hon. Friend said, that it would be quite wrong for the Government to extract additional revenue from road users by means of a toll?

Mr. Barber: I am sure my right hon. and learned Friend will take note of that.

Mr. Jay: Will the hon. Gentleman inform his hon. Friends that the Road Fund has been abolished?

Mr. Barber: I assume that my hon. Friends realise that it was abolished in, I think, 1956.

Mr. J. T. Price: To give a proper perspective to this Question, will the hon. Gentleman bear in mind that over 70 per cent. of vehicles on the roads are chargeable wholly or in part to business accounts and that to conclude that this is taxation revenue is quite misleading because a great deal of the taxation


revenue is never in fact received by the Treasury, as it is given back in allowances under Schedule D?

Bank of England Building, Bristol

Mr. K. Robinson: asked the Chancellor of the Exchequer if he will instruct the Governors of the Bank of England not to proceed at present with the construction of their building on the Wine Street site in Bristol, pending discussion of proposals for the comprehensive development of the site.

Mr. Barber: No, Sir.

Mr. Robinson: Does the hon. Gentleman not appreciate that the erection of this building will utterly frustrate the comprehensive development of this site which perhaps is the most important clear urban site in England? Can he not ask a publicly-owned organisation like the Bank of England to make a gesture such as this in the public interest? Is he not aware that the widespread demand for comprehensive development is important?

Mr. Barber: I think the hon. Member will agree that this essentially is a matter for the Bank of England to deal with itself and not a matter in which it would be proper for my right hon. and learned Friend to intervene. I have made inquiries and I am informed that the plans for the building in question were prepared by a distinguished architect in full consultation with Bristol Corporation and that that corporation has given entire approval and permission for the building concerned.

Decimal Currency

Mr. Langford-Holt: asked the Chancellor of the Exchequer by what means he is testing public opinion on its attitude to decimal currency during the full consideration of this matter by Her Majesty's Government.

Mr. Barber: There are welcome signs of growing interest in this question and I think that public opinion is beginning to reveal itself without any intervention by the Government.

Mr. Langford-Holt: The more delay there is in deciding this question the more costly it becomes. When do the

Government intend to make a decision, whichever way it goes, and act upon it?

Mr. Barber: As I said a few weeks ago, my right hon. and learned Friend hopes to make a statement later in the year.

Teachers (Pensions)

Mr. McMaster: asked the Chancellor of the Exchequer if he will consider granting an increase in the pensions of retired school teachers.

The Financial Secretary to the Treasury (Sir Edward Boyle): The last Pensions (Increase) Act came into effect in August, 1959: under this, public service pensions, including those of teachers, were increased at the maximum by 12 per cent. My right hon. and learned Friend has no intention at present to introduce another such Bill.

Mr. McMaster: I thank my hon. Friend for that reply, but will he bear in mind that these percentage increases are totally inadequate in the case of the older retired teachers because of the very low basic pension on which they retired? Will my hon. Friend review the situation on grounds of equity and hardship?

Sir E. Boyle: We will, of course, look at that, but I would remind the House that successive Conservative Governments have introduced three pensions increase Measures since 1952, and that the 1959 Act was considerably more generous in several respects than its predecessors.

SIR ROY WELENSKY (DISCUSSIONS)

Mr. Wyatt: asked the Prime Minister whether he will make a statement on his recent conversations with Sir Roy Welensky.

Mr. Stonehouse: asked the Prime Minister if he will make a statement on his discussions during the past week with Sir Roy Welensky regarding the proposed Constitution for Northern Rhodesia.

The Prime Minister (Mr. Harold Macmillan): Sir Roy Welensky and I issued a joint statement before he left London last Monday. We said that we


had had a valuable exchange of views about the Northern Rhodesia Constitution. But we made it clear that no attempt was made to carry out anything in the nature of negotiations. The House will, I am sure, welcome the agreement between us that detailed consultations with the various political groups should proceed at Lusaka.

Mr. Wyatt: While sympathising with the Prime Minister's difficulty in trying to control a party bitterly divided between the Colonial Secretary and Lord Salisbury—[Interruption.]—it is a very serious split, as hon. Members opposite know—could he say whether he has now decided to accede to Lord Salisbury's demand that the Colonial Secretary should go or that the concession is merely to be a watering down of the Colonial Secretary's proposals?

The Prime Minister: Neither.

Mr. Stonehouse: Is the Prime Minister aware of the very great concern felt in Northern Rhodesia about the secret talks which took place last week and that the suspicions aroused are likely to undermine the success of the talks now to take place in Lusaka? When will he give details to the leaders of the political parties concerned in Northern Rhodesia of the actual results of discussions he had with Sir Roy Welensky?

The Prime Minister: The discussions were an exchange of views, as stated in the communiqué. Detailed discussions will continue as in the ordinary way after one of these conferences, with political groups all playing their rôle. What I fear is that there are some people who would like things to end in a row. I prefer them to end in agreement.

Mr. Gaitskell: Can the Prime Minister give us an assurance that in his conversations with Sir Roy Welensky he gave no assurance that the British Government have changed their attitude in this matter and that he made no commitment to Sir Roy Welensky that any of his particular proposals would be discussed, let alone accepted?

The Prime Minister: As many proposals will, of course, be discussed as are put in by the leaders of the political groups. If the right hon. Gentleman

will look at the communiqué, he will see that it is very precise. It says:
The United Kingdom Government confirmed that they are prepared to consider any proposals within the framework and general spirit of the White Paper and the statements by Ministers in the House of Commons, which may be put forward by the political groups in Northern Rhodesia.
That is exactly what the Colonial Secretary said in this House.

Mr. M. Foot: In view of the potentially dangerous situation in Northern Rhodesia, does not the right hon. Gentleman think it would be helpful if he issued an absolutely clear statement that at least there would not be any retreat from the proposals which the Colonial Secretary presented to the House of Commons?

The Prime Minister: The communiqué is perfectly clear, the situation is clear, and I repeat that what I think most hon. Members hope is that these matters will be resolved with general agreement in order that they should command general support throughout the territory.

Mr. Grimond: Referring to the conference at Lusaka, are any proposals being put forward on behalf of Sir Roy Welensky? If not, is it clear that he cannot put proposals forward outside this conference which might affect it?

The Prime Minister: The proposals at Lusaka will be put forward by the leaders of the Northern Rhodesian groups. No doubt they will do so.

PRIME MINISTER (OVERSEAS VISITS)

Mr. Teeling: asked the Prime Minister whether, after his forthcoming visit to Japan, he will also visit Peking.

The Prime Minister (Mr. Harold Macmillan): As my right hon. Friend the Home Secretary told the House on 8th February, I hope, if I can manage it, to visit Japan during the autumn. As to a visit to China, there is nothing that I can add to what I said in reply to Questions by my hon. Friend the Member for Tynemouth (Dame Irene Ward) on 8th December last.

Mr. Teeling: Not knowing what my right hon. Friend said to my hon. Friend—

Dame Irene Ward: Shall I tell my hon. Friend?

Mr. Teeling: —can my right hon. Friend confirm that the rumours which have been going round in the Far East that he would go to Peking are not, in fact, true, because it would cause a lot of unhappiness amongst people in the Far East that we might be about to lose face considerably, as Red China has not yet allowed an ambassador from us to its country and from them to us?

The Prime Minister: Visits of this kind, if they are to be useful, must be carefully timed. It is also sometimes wise before visiting a country to get an invitation to do so.

Mr. Peyton: asked the Prime Minister what communication he has received from the President of the United States of America with regard to the subjects to be included in their forthcoming talks; and to what extent these include shipping.

The Prime Minister: I would refer my hon. Friend to my answer to the right hon. Member for Easington (Mr. Shinwell) on 14th February.

Mr. Peyton: During my right hon. Friend's talks with the President of the United States, will he make it clear to the President that the persistent pursuit of policies which are bound to weaken the interests of its allies will do nothing in the long run to help the United States? Will he also indicate that America's sustained refusal to compromise or even consider this vital British interest is arousing a good deal of well justified concern in this country? The best foundation for an alliance is not the maxim, "Heads I win, tails you lose".

The Prime Minister: I will, of course, note what my hon. Friend has said, and I am well aware of the great importance of this question to British interests.

Mr. J. Howard: Will my right hon. Friend draw to the attention of the President of the United States the fact that the subsidies allowed by the United States to the two large American passenger liners operating on the North Atlantic route have compelled us to subsidise the building of the new Cunarder in order to avoid allowing the Americans to dominate the North Atlantic passenger trade?

The Prime Minister: The whole question of subsidy is a very difficult one, and I take note of what my hon. Friend has said.

Mr. Shinwell: Does not the Prime Minister realise that the action taken by American shipping interests, unless suppressed or arrested in some way, is calculated to destroy the efficacy and efficiency of the British Mercantile Marine? We surely cannot expect our friendship with the United States of America to remain as it is unless American shipping interests realise that we are an ally and in some respects in partnership with them.

The Prime Minister: Yes. Those are the arguments which we have tried to advance.

FIRST LORD OF THE TREASURY (SALARY)

Mr. Wyatt: asked the Prime Minister whether he will introduce legislation to raise the salary of the First Lord of the Treasury.

The Prime Minister: No, Sir.

Mr. Wyatt: While many people might agree with the Prime Minister that he personally is not worth more than Dr. Beeching, does not he think that the dignity of his office demands that it should be given a status at least nearly equivalent to that of the Chairman of the Railways Board? Is he not aware that the Minister of Transport has made it clear that there will be many more appointments in the new Railways Board at salaries above that paid to the Prime Minister? Is it not time that the salaries of all Cabinet Ministers, which were fixed in 1831, were brought up to date?

The Prime Minister: While I am very grateful to the hon. Gentleman for his care of my financial needs, he rather spoiled the delicacy of his approach by the way in which he introduced his last supplementary question.

MINISTER OF OVERSEAS AID

Mr. Biggs-Davison: asked the Prime Minister when he expects to be in a position to make a statement about the appointment of a Minister of Overseas Aid.

The Prime Minister: I would refer my hon. Friend to the statement that I made in the House on Tuesday about the new Department for Technical Co-operation. I assume that this covers the point he has in mind.

DISARMAMENT

Mr. Warbey: asked the Prime Minister what steps he proposes to take to give effect to the disarmament policy agreed upon at the Commonwealth Prime Ministers' Conference.

Mr. A. Henderson: asked the Prime Minister whether he will now seek to discuss with President Kennedy and Mr. Khrushchev the Commonwealth Prime Ministers' disarmament proposals.

The Prime Minister: In future discussions on disarmament in the United Nations or elsewhere Her Majesty's Government, and no doubt other Commonwealth Governments, will be guided by the principles set out in the statement by the Prime Ministers. As to discussions with President Kennedy and Mr. Khrushchev, I have no arrangements to see Mr. Khrushchev. No doubt I shall be discussing with President Kennedy, among many other subjects, the next step to be taken in the field of disarmament.

Mr. Warbey: Is the Prime Minister aware that the proposals made by the Commonwealth Prime Ministers represent a significant advance on any previous Western proposals, in that they propose that disarmament should be continuous, rapid and subject to a precise timetable, and that control should be instituted simultaneously with actual disarmament and not before? Will not the Prime Minister now put forward detailed British plans based on these principles in order to facilitate the possibility of real agreement?

The Prime Minister: No. The proper course is to take up negotiations as to the forum in which the disarmament committee or committees shall now meet.

Mr. A. Henderson: Does not the Commonwealth Prime Ministers' communiqué urge that the principal military Powers should resume disarmament negotiations without delay? If it is true that negotiations are not to be resumed until

1st August, as has been suggested by President Kennedy, is it not highly desirable that direct discussions should take place with Mr. Khrushchev in the meanwhile on the proposals contained in the communiqué?

The Prime Minister: No. I think that everybody will agree that, whatever the date may be—I think the American Government will wish to be as swift as they can—these negotiations to be fruitful must include the greatest armed State in the world, the United States.

Mr. P. Noel-Baker: In the meantime, will the Prime Minister ensure that the declaration of the Commonwealth Prime Ministers is circulated to the delegations to the United Nations Assembly now in session?

The Prime Minister: Yes. The right hon. Gentleman has asked me to do that already. I ask him to forgive me if I have not written to him about it. I will certainly see that it is dealt with before I leave tomorrow.

Mr. A. Henderson: May I ask the Prime Minister to realise that I was not suggesting the exclusion of the United States Government? I asked him this. Pending the resumption of the negotiations on 1st August, would it not be a good thing to enter into discussions with Mr. Khrushchev as well as with the American President?

The Prime Minister: I should be very doubtful of the wisdom of that. We must proceed with our American allies and the other great States of the West.

MINISTER OF SPORT

Mr. Hector Hughes: asked the Prime Minister if he will now appoint a Minister of Sport; and if he will make a statement.

The Prime Minister: No, Sir. But the Government are considering as effective but less spectacular ways and means of helping sport.

Mr. Hughes: In view of welcome novelties such as Russian horses in the Grand National, does not the Prime Minister agree that every effort should be made to keep up Britain's score in sport, as in politics and economics, as other nations are doing?

The Prime Minister: Yes, and the question could not have been asked by anyone better than the hon. and learned Gentleman, who has the honour of having ridden a horse fifth in the Grand National.

COMMONWEALTH GROUP (PUBLICATION)

Mr. Biggs-Davison: asked the Prime Minister whether he has considered the proposal for a new status of association outside the Commonwealth, as outlined by the Expanding Commonwealth Group in their recent publication, Expanding Obligation, a copy of which has been sent to him; and having regard to Dr. Verwoerd's decision to withdraw South Africa's application for continued membership of the Commonwealth, when he expects to make a further statement on relations between the United Kingdom and South Africa.

The Prime Minister: I have read the interesting suggestions in the publication to which my hon. Friend refers. With regard to the second part of the Question, I would refer to what was said yesterday by my right hon. Friend the Commonwealth Secretary and myself.

Mr. Turton: Will my right hon. Friend bear in mind that this is of immediate importance, not only in respect of the Union of South Africa, but also in respect of countries like Somalia? Bearing in mind that all the Commonwealth Prime Ministers have had copies of this publication, will he institute consultations with the Commonwealth Prime Ministers on this problem?

The Prime Minister: No. I have read these proposals and I think that they have considerable interest and possibilities, but I do not think I can commit myself further today.

BUSINESS OF THE HOUSE

Mr. Gaitskell: May I ask the Leader of the House to state the business of the House for next week?

The Secretary of State for the Home Department (Mr. R. A. Butler): Yes, Sir. The business for next week will be as follows:
MONDAY, 27TH MARCH—SeCOnd Reading of the Housing Bill and Committee stage of the necessary Money Resolution.
TUESDAY, 28TH MARCH—Motion to approve the Report from the Business Committee on the Allocation of Time for the remaining stages of the National Health Service Bill, which is a formal proceeding.
Conclusion of the Committee stage and remaining stages of the White Fish and Herring Industries Bill.
Report and Third Reading of the Hyde Park (Underground Parking) Bill.
Committee and remaining stages of the Patents and Designs (Renewals, Extensions and Fees) Bill [Lords]; and the Human Tissue Bill.
We also hope to make progress with the remaining stages of the Sheriffs' Pensions (Scotland) Bill, and the Local Authorities (Expenditure on Special Purposes) (Scotland) Bill.
WEDNESDAY, 29TH MARCH—Report and Third Reading of the National Health Service Bill [Allotted Day].
THURSDAY, 30TH MARCH—It is proposed to meet at Eleven a.m. Questions will be taken until Twelve noon, and the House will adjourn at Five o'clock.
Adjournment for the Easter Recess until Tuesday, 11th April.

Mr. Gaitskell: First, may I ask the right hon. Gentleman whether the Government propose to make an early statement on the recent espionage case, and its implications?
Secondly, can the right hon. Gentleman say when the Motion for the Adjournment for the Easter Recess is likely to be taken? Does the right hon. Gentleman realise that the amount of business which he proposes that we should take on Tuesday seems to us to be impossibly large, and that it is very doubtful whether we will be able to get through it all in the time? Thirdly, may I ask when it is proposed to debate the Report of the Committee of Privileges?

Mr. Butler: My right hon. Friend the Prime Minister is making a statement on the espionage case immediately after business questions.
I think that we shall probably take the Motion for the Easter Recess on Tuesday.
I agree that there is quite a list of Bills for Tuesday, but most of them are not of a very controversial character? [HON. MEMBERS: "What?"] In the prevailing spirit of good will we must just try to make as much progress as we can.
I do not think that it will be possible to take the Report of the Committee of Privileges before Easter, so we shall have to take it at as early a date as possible thereafter.

Sir. B. Janner: Why has the right hon. Gentleman lost his enthusiasm for the Albemarle Report? Does he ever propose to bring it forward to the House? Why does he not bring it forward, so that we can discuss the very important topic with which it deals?

Mr. Butler: I have not lost my enthusiasm for the Report, but I am not able at present to find time for it.

Mr. J. Howard: When does my right hon. Friend hope to find time to discuss the Motion relating to decimal coinage, bearing in mind that the longer the problem is left the more costly it will be to deal with?
[That this House calls attention to the need for decimal coinage, recognises the increasing and once-for-all cost of the change, notes the number of Commonwealth countries which have changed, or are changing, believes it to be a practical business decision, and urges Her Majesty's Government to introduce a decimal system of coinage at an early date.]

Mr. Butler: I cannot, at the moment, promise a definite date.

Mr. M. Foot: In view of the extremely disturbing Written Reply that the right hon. Gentleman himself gave to us last week on the case of Timothy John Evans, and replying, as he did, in circumstances in which the House was not able to put any Questions to him about it and was not able to debate it, does he not think that his own reputation as Home Secretary rests on whether he is prepared to arrange for a full opportunity to debate the matter?

Mr. Butler: I indicated to the right hon. Gentleman the Member for South Shields (Mr. Ede) at the time that I was not at all against an opportunity for further explanation of the reasons that

led me to my very serious and difficult decision. Whether we can find time for it, I do not know, but there would, presumably, be opportunities of which hon. Members could avail themselves. At any rate, I stand in the position of being perfectly ready to answer further for my action if opportunity offers.

Mr. Ridsdale: In view of the growing seriousness of the situation in Laos, may I ask my right hon. Friend whether we might not have an early debate on foreign affairs?

Mr. Butler: I can only note what my hon. Friend has asked, and consult those of my right hon. Friends principally concerned.

Mr. Grimond: In view of the position of the electors of Bristol, and also of the gentleman concerned, who is now suspended between heaven and earth—[An HON. MEMBER: "Which is which?"] I do not want to cause embarrassment by defining too closely which it is—will the Leader of the House do his best to find time for an early debate on the Report of the Committee of Privileges?

Mr. Butler: In so far as the Committee of Privileges presented a Report which, I think, in respect of the law, is of a definite character, the situation may be described as clearer, but I agree that until the House has had an opportunity of discussing, and either endorsing or rejecting, the Report, the situation will not be completely clear, because the matter is one for the House as well as for the Committee of Privileges. I fully understand that but, in view of the length of the Report and the importance of the issue, it will not be very easy to find an immediate day, although we shall try to choose an early date.

Mr. Hector Hughes: As white fish and herrings have kept the House up so late on several previous occasions, will the right hon. Gentleman arrange the business on Tuesday in such a way that white fish and herrings can be taken at a more appetising time?

Mr. Butler: It is, in fact, the first course for Tuesday. We cannot have it any earlier.

Mr. McMaster: In view of serious unemployment in Northern Ireland, particularly in the shipbuilding industry,


will my right hon. Friend find an early opportunity to discuss the Motion standing in the name of many hon. Members and myself on the state of the shipbuilding industry?
[That this House notes with very grave concern the serious problems facing the British shipbuilding industry, and urges Her Majesty's Government to take all possible steps to remedy the situation.]

Mr. Butler: On this occasion, I can only note my hon. Friend's request.

Mr. S. Silverman: Would not the right hon. Gentleman reconsider the answer he gave a few minutes ago to my hon. Friend the Member for Ebbw Vale (Mr. M. Foot)? Does he not think that we are getting to a very abnormal, not to say anomalous, Parliamentary situation? Does he remember that quite a long time ago a very large number of hon. Members put down a Motion about the exercise of the Royal prerogative, and that his reply then was exactly what he said to my hon. Friend now, to the effect, "I am not against a discussion if only time could be found for it"?
Time never has been found. Does the right hon. Gentleman hold out any hope whatever that there will be time on this occasion? Is he not really using his opportunities and functions as Leader of the House to avoid or evade his obligation as Home Secretary to account to the House of Commons for what he does in this matter?

Mr. Butler: No, Sir. I should say that, if anything, the fact that I am Leader of the House as well as Home Secretary makes me consider the Home Secretary's wishes more than I otherwise would. I fully realise the importance of an exchange of views of this character, but I do not see any very great opportunity for time being found unless hon. Members themselves take an opportunity that is very often available under the process of Parliament.

Mr. Peyton: Can my right hon. Friend tell the House what use he would make of the time that would be saved if the hon. Member for Nelson and Colne (Mr. S. Silverman) were a good deal more silent?

Mr. S. Silverman: If I may follow that as a point of order which the hon. Member has just put, may I ask—

Mr. Speaker: It could not have been a point of order. It was a question addressed to the Leader of the House.

Mr. Silverman: Then may I put a point of order, Mr. Speaker? May I ask you, Sir, whether all of us, in whatever place in the House we sit or in whatever capacity, will have the protection of the Chair in exercising our Parliamentary functions however objectionable they may be to hon. Members opposite, and perhaps all the more if they are objectionable?

Mr. Speaker: I hope that all hon. Members will have my protection properly at all times so far as it is mine to give, but one or two jests do slip out from time to time.

ADMIRALTY UNDERWATER WEAPONS ESTABLISHMENT, PORTLAND (ESPIONAGE)

The Prime Minister (Mr. Harold Macmillan): With permission, Mr. Speaker, I will now make a statement about the recent case of espionage in the Admiralty Underwater Weapons Establishment at Portland.
This case obviously raises two questions: first, whether security procedures were properly applied; secondly, whether those security procedures are the best that can be devised and applied in practice.
Immediately after the arrests on 7th January, security experts made a thorough investigation into the working of the security system at that Establishment. As the Lord Chief Justice said:
Ultimate security depends and must depend on the honesty of those who are put in a position of trust, and if a person suddenly and for gain becomes dishonest, no security measures can prevent it and its prevention becomes a matter of great difficulty".
All Admiralty establishments have been directed to review immediately the operation of security systems in their establishments.
My noble Friend the First Lord of the Admiralty will set up a committee of inquiry, to be presided over by an independent person of high standing, to


ascertain what security weaknesses existed at the Admiralty Underwater Weapons Establishment and to determine where responsibility lies for such breaches of security as occurred, in order that the First Lord may then consider the disciplinary aspects of the whole matter.
As regards the second question, whether the existing security procedures which apply to the Government Services generally are satisfactory, these were comprehensively reviewed by a Committee of Privy Councillors in 1956. Parliament accepted these procedures as appropriate and adequate for their purposes. They are kept continually under review by the appropriate authorities.
I think that I should add, in view of statements that have been made, that, while it is clearly not in the public interest to reveal the amount of damage done, there is no evidence to suggest that the information compromised covered more than a relatively limited sector of the whole field of British naval weapons. There is no ground to suppose that any information belonging to the United States of America or other N.A.T.O. countries was compromised. There is no possibility of information connected with nuclear research and development, or information concerning nuclear weapons or nuclear propulsion, having been betrayed by these spies.

Mr. Gaitskell: Is the Prime Minister aware that the disclosures made at the espionage trial and statements which have been made since then have caused great shock and surprise among the public generally because they appear to reveal very grave deficiencies in our security arrangements? Can he really say that the amount of information made available to foreign Governments as a result of this spying is as limited as he suggests? Is he aware that certain naval officers have, in statements, implied that a great deal more may have been made available?
In our opinion, this is not a matter which can be treated as exclusively the affair of the Admiralty. Is it not the case that what has transpired shows a lack of co-ordination, for example, between our security services and those of the United States, and between the Foreign Office and the Admiralty? Is it not clear that, as the Minister responsible for counter-espionage, the Prime

Minister himself is involved in this also and, in all the circumstances, does he not feel that the whole situation merits a much wider inquiry than the one which is now contemplated, possibly the convening of a Privy Councillors' Committee on security, so that the whole matter can be gone into and the country given greater assurance than it possesses at the moment?

The Prime Minister: The information which I have given to the House has been given to me by experts, and I have every confidence that what they have told me is correct. I have seen certain rumours. For instance, it was suggested that the plans of submarine "Dreadnought" were disclosed. This is not true. The only drawings which could possibly have been connected with "Dreadnought" at the Research Establishment at Portland were the drawings of a simple electric cable layout.
The right hon. Gentleman said, quite truly, that there are two aspects to the matter. The first is: did the Admiralty carry out properly the system which we laid down in 1956? On that, there will be the inquiry, with an independent head. It may be found that the laxity is not in the system, but in the application of it by certain individuals. That I cannot prejudge.
There is the further question whether we should tighten up the whole system. The right hon. Gentleman will remember very well, as I remember very well, the circumstances in 1956 which arose out of the case of men who had defected from our country. I remember the debate, because I had to wind up. It is, of course, very difficult to hold the balance between national security and the freedom of the individual from perpetual surveillance in a free society. Some of the right hon. Gentleman's right hon. Friends took part in the inquiry at that time.
After the Admiralty case, which really must be properly pursued to see whether it is there that things went wrong, I will myself look at the matter again and consider whether we ought to tighten up in any way the actual procedures laid down in 1956, but I must warn the House that it would mean a much greater range of inquiry about the activities of individuals if we were to adopt a different procedure. As I say, I will look at it. The


first thing is to clear up the circumstances of this case.

Mr. Gaitskell: That answer really does not deal with the main point I made. Is the Prime Minister aware that what is, I think, concerning the general public so much is that a spy ring of this kind has been able to operate for several years in this country without detection, and that this seems to have been the result not only of inadequate security arrangements in the Admiralty, but of complete failure on the part of our counter-espionage services?
How was it, for instance, that two of the members of the spy ring were allowed to come from the United States, where they were suspected of being spies, without our people being informed? How was it, for instance, that Houghton was allowed to be employed at the Admiralty without any adequate security check, despite the fact that he was obviously a bad security risk and that this must have been plain to our Ambassador in Warsaw? Does not the Prime Minister appreciate that it is really not enough just to have this simple, limited, domestic inquiry, with the Admiralty inquiring into its own affairs? [Interruption.] All right. It will have an independent chairman, but what of the other members of the committee of inquiry? I should like to know about that.
Does the Prime Minister realise that this matter, as I say, goes beyond the Admiralty and that, in our opinion, a much wider inquiry is necessary? With respect, it does not at the moment raise the question of the balance of security against freedom. What we want is an inquiry to show what has gone wrong.

The Prime Minister: With the right hon. Gentleman's last remarks I cannot agree. It is a question of what range of personnel, in a particular form—

Mr. Gordon Walker: That is not true.

The Prime Minister: It is no good saying it is not true. If the right hon. Member does not withdraw, I shall ask for the help of Mr. Speaker. It is true. One of the questions involved is whether positive or negative vetting should be applied, and to what groups of people. There is a very big difference between them. We may have to go to what is called positive vetting over a wider field.
On the other question which the right hon. Member the Leader of the Opposition asked, these Americans arrived on false names and false passports supplied to them in the United States.

Mr. Deedes: Does my right hon. Friend think that it is a little hard on the security services now to be charged with lack of vigilance for failing to take precautions which, at other times and in other circumstances, are sometimes castigated as witch-hunting and victimisation?

The Prime Minister: That is one of the great problems. We had this all out four years ago. It seems to me that the first thing is to find out whether the agreed system, the system that is supposed to be applied, was properly applied by the Admiralty officials. I can assure the House that the chairman of this committee will be an independent person. He may be a judge. I will see that this is an absolutely independent inquiry. That is right.
I am not trying to burke this thing. Of course, we want to catch the spies who work under modern conditions and whose machinery of espionage is something absolutely unknown in the past. Incredible work, skill and effort has gone into this. I should like a little time to see whether we need to look again at the 1956 decisions and to make fresh proposals. That I undertake to do, but I think that the thing should be done in order. First, find out what went wrong working under the present system and then see whether we must make still further sacrifices in what is really unpleasant—the watching of people, and so forth—and apply a stricter system.

Mr. Wigg: Will not the right hon. Gentleman agree that, while the problem of the vetting, whether positive or negative, of individuals can be properly left to an independent inquiry, if that is the course chosen by the Prime Minister, the right hon. Gentleman must not run away from his personal responsibility for the espionage services? Will he therefore look forthwith at the intelligence service as a whole? This would be welcomed in the House. The right hon. Gentleman will doubtless remember that, in the case of Commander Crabbe, there was a very serious breakdown.

The Prime Minister: May I correct a mistake which I made? These passports were issued by the New Zealand Government, but obtained by fraud. I agree that this is a tremendous burden of responsibility which lies upon me. I am not going to try to run away from it. I went through it all four years ago in one respect, when I was Foreign Secretary. Naturally, this has been a great blow to me and to all of our friends, but I am not going to be hurried into making a bad decision. It will take a few days to think about the best course. I am sure that the right course is to find out what went wrong by the special inquiry and then, with all those who understand it, see whether we need some different system, whether the system of the precise relations between the counter-espionage people and the Department is the right one, and so forth. I prefer to do it in that order.
I can assure the House that an event of this kind is a terrible blow. But, having learnt, in the last two or three years, the extraordinary degree to which espionage goes in every country, or some countries, where one cannot speak, not only in a house but almost in the open air, I can say that the problems set the counter-espionage people are of a far greater degree than they have even been in the past.

Mr. F. M. Bennett: In view of Mr. Khrushchev's violent repudiation of all forms of espionage between peaceful nations after the U.2 incident, can my right hon. Friend say whether we can expect an apology and promise not to repeat this sort of behaviour in the future?

The Prime Minister: I think that we would be rather hopeful if we expected it.

Mr. G. Brown: I am sure that this has been a great blow to the Prime Minister, as it has been to all of us. However, he still seems to be missing the main point of what my right hon. Friend was putting. Whatever the problem of naval Departmental application of security may be, there appears to be disclosed by the papers in this case that we have had a chance to see a very much wider breakdown which really ought not to be got away with merely

by saying that the Navy seems to have failed. This man Houghton was returned from Warsaw. There should have been an entry on his records. There should have been contact between the Foreign Office and the Service. None of this appears to have happened.
Information about what this man was doing was, in fact, available in 1957. It was not operated on by the counter-espionage service. This has nothing to do with the Navy. It seems that there has been a very wide breakdown over a very wide field. Therefore, my right hon. Friend was saying, and I should like to press, that the Prime Minister should be willing to indicate that there will be an inquiry in 1961, as there was in 1956, into the whole of our security services and not just that of the Navy. We think that another Privy Councillors' conference might be the right way to do this.

The Prime Minister: This was not a Foreign Office matter. The return of this man from Warsaw was a naval matter, because he was on the naval attaché's staff. It was entirely a matter for the naval Department. Whether there was a breakdown there is a point which will be included, I am informed, in the inquiry that it is proposed to set up.
On the wider question, I can assure the right hon. Gentleman that if I think it useful I will come back again and ask for a fresh discussion. What we all want to do is to make it as effective as possible. I ask the House for a little time to consider the situation which has developed. We ought to make it as safe as we possibly can. If we can get the support of the House as a whole, including the Opposition, for the kind of measures which are sometimes necessary and will become more and more necessary to secure safety, that is in the national interest. I cannot bind myself, but I will try to act in this matter not as the leader of one party, but as the Prime Minister of the country, and I hope that I have the support of all hon. Members who wish to preserve the safety of our country in every respect and to avoid any leakages of this kind.

Several Hon. Members: rose—

Mr. Speaker: Clearly, we cannot debate this matter now.

Mr. Gaitskell: With respect, I am sure that you, Mr. Speaker, will agree that this is a matter of very great importance. In the light of the Prime Minister's answers to supplementary questions, may I ask him this: is the Admiralty inquiry to be independent in the sense that, not only the chairman, but the other members of the inquiry will be independent? How long does he think that the inquiry will take? When does he think that he will be able to tell the House whether this wider inquiry, which we believe to be necessary, will be held?

The Prime Minister: I am quite clear that the head of it will be an independent person. Whether there should be naval officers on it, I am not sure. I think that it would be convenient to have some, rather in the nature of a court-martial or court of inquiry. But I will consider the point and we will announce the names of the board of inquiry, or committee of inquiry, as soon as possible. I must call attention to the fact that there is a question of appeal which we have to get out of the way, and then there will be quite a lot of questions to sift. The inquiry will sit as rapidly as possible and will produce its report as rapidly as possible.

Mr. Shinwell: May I raise a point with you, Mr. Speaker? You will be aware that the Prime Minister is about to leave the country and will be away for some time. Therefore, we may not have the opportunity of putting questions to him as to the nature of this inquiry. Will you, Sir, permit me to put a question to him about the nature of the inquiry?

Mr. Speaker: I know the right hon. Gentleman's difficulty. I hope that he will appreciate mine. I do not run away from the importance of this subject, but, from the House of Commons point of view, these proceedings are totally irregular. There is no Question before the House and no cue for any debate. I think that that involves the Chair in trying to bring these questionings to an end.

Mr. Shinwell: May I ask the Prime Minister to defer consideration of the precise nature of the inquiry and the appointment of a judge, or whoever it may be, to undertake the inquiry until we have had an opportunity of making

submissions to him arising out of our experience in Service Departments?

Mr. Speaker: I do not know whether the Prime Minister can help, but there was some mention of time for appeal, and so forth, and I have in mind dates, and so on. I know how important this us, but I imagine that nothing effective can be done in this context perhaps until the right hon. Gentleman comes back, though I do not know.

The Prime Minister: I will consider what the right hon. Member for Easington (Mr. Shinwell), who has great experience in these matters, has said. There are two considerations in this. I am informed that although there is a notice of appeal, which, of course, may take quite a long time, it should not really impede—at least, not seriously impede—what we want to look into. My instinct would be to get the thing going while the scent is hot, to get on with it now, but I will consider what the right hon. Gentleman has said. I repeat that my instinct will be to get on with it as quickly as we can, while all this information can most readily be obtained.

Mr. Wigg: On a point of order, Mr. Speaker. I asked permission to raise this matter on the Consolidated Fund Bill later tonight. I was aware of the Ruling, which may be found in Erskine May, that it would be out of order to raise a matter when notice of appeal has been given. I took the precaution of consulting the Registrar of Appeals of the Central Criminal Court, and he told me that no notice of appeal had been given. That was at twelve o'clock. Consequently, the House is quite misinformed and is wrong in assuming that notice of appeal has been given

Mr. Speaker: Perhaps I might seek to get this straight. If he catches my eye and discusses this topic, the hon. Member for Dudley (Mr. Wigg) will be wholly unembarrassed by any question relating to appeal, because on his information no notice has been given. But I did not understand that to be necessarily applicable to what the Prime Minister has been saying, which is, of course, that notice may yet be given. However, do not let the hon. Gentleman be deceived; his position is quite clear.

Mr. Wigg: Further to that point of order, Mr. Speaker. I do not think


that I am wrong in saying that the Prime Minister's last remarks were based on the assumption that notice of appeal had been given. That will be within the recollection of the House. I had taken the precaution of checking that, and, indeed, had gone further and arranged for the Registrar of Appeals of the Central Criminal Court to telephone me again at 4.30 p.m. to establish the facts.

Mr. Gaitskell: Further to the point of order, Mr. Speaker. Is it not, in any case, a fact that if an appeal were to be lodged we should not be inhibited from debating the general security aspects of this case and the implications of it, and that, equally, we should not be in order in discussing whether Houghton, or whoever he is, was guilty or not? I do not think that that would prevent our discussing the general implications so far as our security is concerned. Will you please rule on that, Mr. Speaker?

Mr. Speaker: No, I do not think that it would for a moment. But it is possible for an hon. Member discussing a topic to feel embarrassment because some part of it is sub judice while he is making a speech in this House. I was trying to assure the hon. Member for Dudley that no such consideration at present arises should he be discussing this matter later on today.

Mr. Gaitskell: Further to the point of order, Mr. Speaker. May I just say—I know that you do not wish us to pursue the matter any further this afternoon—that the Opposition reserve the right to raise this matter again before the Easter Recess? It is a matter of the greatest importance. We shall wish

to consider what the Prime Minister has said and any other information coming our way, and, perhaps, press the Government for an urgent debate about the matter.

Mr. Speaker: I express my gratitude to the right hon. Gentleman for assisting me in what is inevitably a difficult duty—bringing this irregular discussion to an end.

BILLS PRESENTED

DEPARTMENT OF TECHNICAL CO-OPERATION

Bill to provide for the establishment of a Department of Technical Co-operation under the charge of a Minister of the Crown, presented by the Prime Minister; read the First time; to be read a Second time Tomorrow and to be printed. [Bill 102.]

PEERAGE (RENUNCIATION)

Bill to provide machinery whereby certain peerages may be renounced for life; to permit persons who have thus renounced to sit and vote in the House of Commons if elected so to do; and for purposes connected therewith, presented by Sir Lynn Ungoed-Thomas; supported by Mr. Gerald Nabarro, Mr. Donald Wade, Mrs. Barbara Castle, Viscount Lambton, Mr. Arthur Holt, Mr. Roy Jenkins, Mr. David Price, Mr. Michael Foot, Mr. Gilbert Longden, Mr. Charles Pannell, and Mr. Peter Kirk; read the First time: to be read a Second time Tomorrow and to be printed. [Bill 103.]

CONSOLIDATED FUND (No. 2) BILL

Considered in Committee; reported, without Amendment.

Motion made, and Question proposed, That the Bill be now read the Third time.

IRON AND STEEL INDUSTRY (DISPOSAL OF HOLDINGS BY I.S.H.R.A)

4.6 p.m

Mr. Harold Wilson: Before I come to the main issue that we are raising—the marketing of State-owned steel shares and stocks—I want to register a forcible protest against the absence of the Chancellor of the Exchequer from the debate, because it is his actions and his policies that we are debating today.
It is not good enough to put up a junior Minister to reply to the case that we shall put forward, partly because we are pressing for radical changes in policy and only the Chancellor can initiate them, whereas a junior Minister will speak from the usual brief on policies already decided, and also because the record with which we have to charge the Government involves some very serious financial manœuvrings on which the House as a whole will want to express its concern.
I know that the Chancellor is abroad on official business, but I submit that, except where major issues of national policy are involved, it is the Chancellor's duty to be present for a debate of this kind on the Consolidated Fund Bill, where his own record is involved. We all know that his journey abroad raises no major issues. Indeed, in The Times today there is the headline:
Germans ask: 'Is Mr. Lloyd's journey necessary?'
The report goes on to say:
Official circles profess to be a little puzzled why the Chancellor has come to Bonn.
We are puzzled, too, why he has gone there.
The report goes on
Mr. Watkinson … raised the matter of increased German purchases from Britain … the earlier repayment of the balance of the German debt is not a matter of dispute.

It also says:
The fault lies to some extent with Britain, who has observed excessive discretion about the sterling balance of payments difficulties in order not to queer the American pitch while the dollar troubles were under discussion.
The Germans tend to question why the Chancellor has had to go to Bonn to discuss matters. I do not want to go into that wide issue. We shall no doubt hear about it in the Budget debate. But I suggest that it is extremely important, whatever kind of gains the Chancellor may have made in our financial relations with Germany, that he should have been here to defend the losses he has been making in the marketing of steel shares. We are all the more alarmed because when the Chancellor has had any discussions with the German financial people he has come back having lost still more of his country's interests so far as finance is concerned.
I now turn to steel. Today, we are debating some very shabby financial manœuvring, the sale, first, of the Staveley and Llanelly undertakings and the sale of prior charge steel stocks of a nominal value of £105 million. These are national assets, and right hon. Gentlemen opposite are disposing of them to their friends at a substantial loss to the taxpayers. Behind all this is a much bigger issue than mere financial fiddling. Behind the debate is the much bigger issue of the ownership and control of this essential basic industry.
On the one hand, we have the Tory Party, not without substantial prompting from the vested interests which poured so much wealth into their General Election campaign—figures have been published of the estimated expenditure on the campaign by the steel companies—standing for the handing over of this national asset whose prosperity is the result of the national effort in economic affairs and national demands. Steel cannot be prosperous without an expanding economy.
Hon. Gentlemen opposite are proposing to hand over the rest of this national asset to private shareholders so that a small minority of people shall get the very rich pickings which attach to equity shares in this industry. The Tory philosophy on this was well expressed in the original debate on denationalisation. On that occasion, now some eight or nine


years ago, Mr. John Freeman, then speaking from this Box on behalf of the Opposition, complained about the Government's proposal to hand over this industry from the nation to the shareholders. One Conservative Member of Parliament was moved to utter the memorable classic of Tory philosophy when he used these words, "Shareholders are the nation." That is the position of the Tories. I am saying this because this is all part of the background to the rather narrow debate that we are having.
On the other hand, the Labour Party stands four square and resolved behind the proposition that the steel industry must be renationalised, that this essential industry must be owned and controlled by the nation and accountable to the nation which it exists, or should exist, to serve. That is the basic issue between us in this debate. I hope that there will be no shadow of any misunderstanding about the difference between the two sides of the House on this.
Nearly five years ago we debated the Trinidad Oil deal. That was the sellout for which the Prime Minister was responsible. I said then that while the Conservative Party always makes a great show of being patriotic, when patriotism and private profit come into conflict it is, of course, patriotism that suffers, as it did on that occasion. So we find that right hon. and hon. Members opposite, not given to schizophrenic tendencies in their private life, basing their public life on the fundamentally inconsistent proposition that while the British people must in no circumstances control their own steel industry, it does not matter at all if foreign interests are allowed to own our essential industries. Indeed, when such a test comes before the House, we always find hon. Members opposite trooping into the Lobby in enthusiastic support of that proposition.
After having said that in terms of the general difference which underlines the debate, I turn to the Llanelly Steel Company and the Staveley Iron and Chemical Company. The resale of the Llanelly undertaking to Dupont Limited for £1¾ million meant a loss to the taxpayer of £1½ million. If one looks at the record of this company—not one of the most strikingly successful—it is true that there have been losses, though over the last

eight years the profits considerably outweigh the losses.
But if one looks at it year by year one finds that the main losses were incurred during the period of recession which followed the economic policies of the then Chancellor of the Exchequer, the right hon. Member for Monmouth (Mr. Thorneycroft), now Minister for Aviation. And, of course, the rather poor showing of this company over the last two or three years was very much connected with the effects of the recession on the demand for the company's products. That demand, of course, later improved.
As my hon. Friend the Member for Aberavon (Mr. Morris) wrote last autumn:
Two years ago its steel department was on short time: in the past year, 300 men have been taken on.
Therefore, at a time when it was becoming more prosperous, this company, with a book value of £3¼ million, was sold for £1¾ million, a loss to the taxpayer of £1½ million—and we have never had any explanation or apology from the Government Front Bench on this question.
I turn now to the Staveley Company—a case which is, in many ways, more serious. This was sold to Stewarts and Lloyds for £6 million and, as the Financial Times said on 13th September:
The Exchequer will have lost just over £2 million.
That was the Financial Times, not Tribune.
When Staveley and the associated companies were denationalised, compensation was assessed at £10½ million. If one makes allowance for the Sheep-bridge Company within this grouping I think that it can be said, and that the Government cannot deny it, that the two companies taken together, valued at £10½ million, have been sold to Stewarts and Lloyds for £6 million, and there is no question of a bad profit record.
Staveley's profits have been over £1 million a year ever since nationalisation, except in the one year, 1958–59, when they fell to £650,000, and that fall was the result of the depression, the recession in demand for steel which all of us remember and which we know followed the policies of Her Majesty's Government. In 1957–58, the profits were £1·8 million in a single year, and yet


the Government think it right to sell off the whole asset for £6 million. Obviously, this valuation was based on a depression year even though, as the Financial Times said at the time of the sale:
A substantial recovery is expected in the current year.
This is how right hon. Gentlemen opposite discharge their responsibilities to the taxpayer. First, they engineer a depression. This cuts the profits of State steel, and then they use the reduced profits to justify, if that is the word, the cheap price when they sell that industry to their friends.
I want the Economic Secretary, if he can, to justify the terms of this sale in relation to the figures I have given. I do not want to under-rate in any way the importance of political gratitude, because that is a quality in which the right hon. Gentlemen opposite, deficient in so many other qualities, are not deficient. It is well-known that Stewarts and Lloyds, the beneficiaries of this public scandal as I believe it to be—of this scandalous transaction—spent during the last General Election, it has been estimated, no less than £269,000 on advertising designed to benefit the Conservative Party. We have £269,000 spent in 1959 and a deal with the Treasury in 1960 which involves a loss of at least £2 million to the taxpayer. That is the record in two successive years. [An HON. MEMBER: "A good investment."] Yes, a very good investment, as I have calculated in terms of return.
The present Government, time after time, day after day, night after night until the late hours of the morning, talk in the House about the financial stringency that the country is facing and, at the same time, in the most calculated fashion, they can hand over assets of this kind to their friends. If, in private affairs, trustees were to behave in this manner in respect of investments that they were supposed to look after, they would end up in gaol. The Chancellor of the Exchequer and his colleagues nevertheless glory in the way in which they have sacrificed the taxpayer to private interest.
We want an answer from the Government. Section 18 of the denationalisation Iron and Steel Act, 1953, says, quite

clearly, and I would ask the Economic Secretary to read it:
Provided that the Agency may discharge their duty under this section in such manner, and by such stages, and with such postponements of the sale of securities or other assets, as they may with the approval of the Treasury determine, and shall so discharge the said duty as to secure, without disregard to other relevant matters, that the consideration obtained from the disposal of assets is financially adequate …
In other words, the 1953 Act lays on the Agency a clear statutory duty to obtain a return which was financially adequate. What is more, for what it is worth, the Act places on the Treasury the duty of approving these arrangements.
I wonder whether the Economic Secretary will tell us that the Treasury has approved these arrangements. I ask whether any hon. Member opposite, in view of the figures I have given, can put his hand on his heart and say that the consideration in these two cases was financially adequate. Is there one hon. Member opposite prepared to get up and say that it was?
If there is not, a very serious state of affairs arises. That is why my hon. Friend the Member for Newton (Mr. Lee) and myself, in the debate on the Address last November, pressed for an independent inquiry into these two transactions. I think that the House is entitled to ask for it under Section 18 of the 1953 Act, and because we have not had even a reply from the Government I repeat the demand from this side of the House that this very serious sacrifice of State property and this loss of the taxpayers' money should be fully and independently investigated.
I should have thought that, in view of the relation in time, at any rate between 1950 and 1960, between the General Election propaganda and this transaction, the Government would have been only too ready to come forward with an inquiry.
There is another point of importance. The sale of this asset to Stewarts and Lloyds creates a monopoly in certain products which did not previously exist—in cast-iron pipes and other essential products required by local authorities for housing other work. Is this in accordance with the Government's policy? Is it their policy to create private monopolies in the production of


equipment needed by local authorities? We all know that when a monopoly of this kind is created, a private monopoly, one must expect an increase in costs and, ultimately, a further increase in the burdens falling on the ratepayers and taxpayers. Is this the Government's policy? I hope that the hon. Gentleman will give me an answer on this monopoly aspect?
The President of the Board of Trade, who, rather to my surprise is also absent from this debate, is supposed to represent this House in the continuing battle against abuses of monopoly power. That is his duty as custodian of the consumer's interests against monopoly. Yet, while these very deals had been going on—and I imagine that they must have had Cabinet approval—creating a monopoly which did not exist before, the President of the Board of Trade, in a speech which he made in the country last November, said:
We are a party of private enterprise and we must be a party of competition. You may find that the number of competitors"—
He was referring to the take-over bids—
is reduced from six or seven to two or three, but as long as there are competitors there is competition.
That was his argument.
Here was a case where, as I say, by the sale of this particular company to Stewart and Lloyds, competition was wiped out. I know that hon. Members opposite will say that when it was nationalised there was no competition. This is wrong. Under the nationalisation procedure there was very real competition between these particular State-owned undertakings and very real protection for the consumer. I wonder whether the President of the Board of Trade was consulted about this deal. Did he approve of it? I hope that we shall hear a good deal about that from the Economic Secretary in the course of the debate.
I turn to the latest episode, and the most urgent and immediate episode—the announcement by the Chancellor of the Exchequer of the sale to private individuals of the greater part of the prior charge capital of the steel industry. This was announced at the end of last month, during the night, in fact, when the House was sitting very late, debating the Health Service charges. The announcement said that the Chancellor

of the Exchequer was putting up for sale 12 securities of seven companies—Colvilles, Consett Iron, Dorman Long, the Steel Company of Wales, Stewarts and Lloyds, John Summers, and United Steel, with a total nominal value of £105 million, out of which £63 million was debenture stock, £10 million loan stock, and £32 million preference shares.
All these securities were offered by the fairy godmother of the Treasury—whose absence we deplore today—at prices giving yields of about 6⅝ per cent. on debentures, 6¾ per cent. on loan stock, and 7⅛ per cent. on preference shares. These are considered fair rates in a deal of this kind. The usurers have never had it so good. I can understand why they say, "Don't let Labour ruin it". Labour might reduce interest rates for the benefit of local authorities, owner-occupiers and other people of that kind.
In this deal, the offers for sale involve coupon rates varying from 5¾ per cent. to 4½ per cent. They are offered at substantial discounts, so the cash value of the offer is reduced to £85 million. I would suggest that a figure of about £100 million, even if we accept the policy of sale, would be more reasonable.
Of course, the finance houses had to cut into this. The "old boy" network of the City was involved. Here are the names: Morgan Grenfell, Baring Brothers, Robert Benson, Lonsdale, Hambros, Herbert Wagg, Lazard Bros., N. W. Rothschild, and J. Henry Schroder. They were all involved in this highly-organised operation. They did wonderfully well out of it. I challenge the Minister to tell the House this afternoon—because the House has a right to know, as the protector of the taxpayers' interests—how much these finance houses in the City made on the first day out of this deal. After all, anything that they made was at the expense of the taxpayer. The amount they made, of course, reflects the extent to which the price was undervalued when this offer was made. I tell the Minister that we expect an answer to this and that he will get no peace until we get it.
Even if we accept the denationalisation policy, which we do not accept, these were handed over at giveaway prices. The premiums on the sale price were established right away on the


first day's dealings, and today most of the stocks stand a great deal higher than when they were offered by the Government. I do not intend to weary the House with a full statement of the gains made since subscriptions were invited on 2nd March, only three weeks ago.
One of the companies, and this is the biggest in terms of the volume of stock offered, the Steel Company of Wales, on today's prices, shows no increase. It has been up and down, but at the moment it is still at the issue price. Consett 5 per cent. debentures, which were issued at £10, stand today at only £11—they have only made 10 per cent. profit in three weeks, obviously an unsatisfactory return. Colvilles 4½ per cent. debentures were sold a month ago at £10 and now stand at £13. Dorman Long offered at £10 now stand at £12. United Steel offered at £10 now stand at £13¾. In other words, anybody who was rich enough to put £10,000 into this would today have £13,750, a capital gain of £3,750 on £10,000 in three weeks—not bad going even by the standards set by hon. Members opposite. All this was at a time when the House of Commons was sitting day and night, talking about health charges. There were worse cases than that. Stocks sold three weeks ago at 2s. in the case of Colvilles at 5½ per cent. cumulative preference now stand at 3s., or a 50 per cent. profit.
I think that the Economic Secretary had better get a team of Parliamentary Private Secretaries if he wants to reply to all this. He does not have enough messengers.

The Economic Secretary to the Treasury (Mr. Anthony Barber): I thought that as the right hon. Gentleman had asked all these questions he would want answers to some of them, and I was hoping to give answers to some of them when I replied. As they involve certain technical details, I am doing my best to obtain them. I hope that he has no objection.

Mr. Wilson: I was not being offensive to the hon. Gentleman. I sympathise with his difficulty. I hoped that he would know these facts before he came to the House. They were in The Times this morning and have been in The Times every morning. I welcome the willing-

ness of the hon. Gentleman to answer all the questions I have put to him. I was only sympathising with him at the small number of people that he has at his disposal for getting the answers to these questions. I was hoping that it might be possible for the Whips to go outside and get a few more, so that we could get the fullest answers. I am bound to tell him that I have a few more questions and a few more stocks to quote.
Dorman Long 5½ per cent. cumulative preference and Stewart & Lloyds 5½ per cent. redeemable preference, and also their 5½ per cent. cumulative preference, now stand at 2s. 6d. They have gone up 25 per cent. in three weeks. Summers 5½ per cent., cumulative preference and United Steel 4½ per cent. cumulative preference shares stand at 2s. 10½d. They have gone up by 10½d., or 37½ per cent. The 5¾ per cent. redeemable preference shares of United Steel stand at 3s. That is another straightforward case of a 50 per cent. increase. As I have said, in these cases there is up to a 50 per cent. appreciation—and on some days the stock has been still higher than that—in a matter of just over three weeks.

Sir Henry d'Avigdor-Goldsmid: I am sure that the right hon. Gentleman does not want to mislead the House. These are initial payments on stocks of a value of £1. Those who undertook to purchase the stocks undertook to pay all the final payments. The initial payment of 2s. on Colvilles is 2s. towards 20s. Therefore, the rise from 2s. to 3s. gives a value to the stock of 21s., or an appreciation of 5 per cent., not 50 per cent. I am sure that the right hon. Gentleman does not want me to go through the arithmetic of all the others. Equally, he has had his little joke and he should accept that the position is not quite as he has suggested.

Mr. Wilson: I am quoting the exact position as stated in the Press this morning. The figures which I have given are the accurate figures. The whole House knows that there has been this big capital appreciation. Different stocks are treated differently. Some are 2s. paid and some are on an entirely different basis where they are sold in stock units costing £10. The fact is that anyone rich enough to invest in these stocks or shares has done extremely well


out of them in the course of the past three weeks. All this is the action of the same Government which, under the alleged pressure of financial stringency, has imposed the health charges and the poll tax contribution.
Our charge is that the taxpayer has been sacrificed to the capital gains speculators. That view is supported. What I quote now is not wisdom after the event. This was said by the City Editor of the Spectator, writing on 24th February, before any of us could forecast with accuracy how these stocks would stand. He said then:
Only a set of doctrinaire, pompous politicians bent on rubbing Socialist noses in denationalisation could have insisted on the Treasury taking such a heavy loss on these unwanted re-issues.
That was an informed City judgment at the time, before it was possible for any of us to be certain about what would happen.
It should be remembered that these sales of prior-charge stocks in these companies have followed, over a series of years, the sale at inadequate prices of equities in the same companies followed by spectacular rises and capital gains over the years. Let me give the House these estimates of the increases in the value of steel shares between nationalisation and the present time, after allowing for bonus and rights issues. These are the same companies of which I have been speaking. United Steel equities sold to the investing public, if that is the right phrase, on 9th November, 1953, have appreciated to a figure of 371 per cent. of the issue price—that is, an increase of 271 per cent. on the money then put in. Stewarts and Lloyds, sold on 25th June, 1954, have risen to 225 per cent. of the issue price, or an increase of 125 per cent.
John Summers, sold on 8th October, 1954, have risen to 426 per cent. of the issue price, or an increase of 326 per cent. Dorman Long, sold on 19th November, 1954, have risen to 232 per cent., an increase of 132 per cent. Consett Iron, sold on 16th December, 1955, have actually fallen to 21 per cent. Colvilles', sold on 20th January, 1955, have risen to 190 per cent., an increase of 90 per cent. The Steel Company of Wales, sold on 14th March, 1957, have increased by 37 per cent.
That is one of the more disappointing performances. These figures show values two, three and four times the denationalisation price. They show case after case where an investor or speculator investing £10,000 at the time of sale in 1953, 1954 or 1955 has made £20,000 or £30,000 capital profit over this period, all of it tax-free. This is still not dealt with by the Chancellor of the Exchequer in the shape of a capital gains tax or by any other means.
One other aspect of this to which I have drawn attention previously is the effect of these transactions on the gilt-edged market. Hon. Members on both sides have raised this question a good number of times both in debates and at Question Time. All of us know of people who have conceived it to be their patriotic duty to buy gilt-edged stock, War Loan, and so on, to lend their money to the nation, and who now are having a very hard time because of the collapse of the gilt-edged market. All of us, on both sides of the House, get letters about this and hear from constituents about the serious difficulties involved. We all know that the main cause of collapse of the gilt-edged market is the Government's blind reliance on monetary policies and the high interest rates which they have had to support.
This special steel financing has been a further factor in knocking the bottom out of the gilt-edged market, which, in recent weeks, has touched an all-time low. We have reached a very serious moment of time concerning gilt-edged. I hope that I am wrong about this and that the Government will do something to put it right, but many informed commentators in the City, of all shades of opinion, Right, Left and Centre—if there are any Left ones there—are expressing deep concern about the ability of Governments in the future to borrow in view of the very harsh treatment of those who have lent to the Government in the past. It is a serious matter that this situation, which was already a matter for grave anxiety even in 1959 and 1960, should have been made so much worse by the Government's irresponsible actions in relation to these steel stocks.
It is a conservative calculation that the effect on the gilt-edged market of these transactions—and a good part of


the effect occurred before the transactions took place, because it was known that this volume of stock was overhanging the market—over the period on gilt-edged was at least four points. The market has fallen by four points in total over the period as a result of this transaction.

Sir H. d'Avigdor-Goldsmid: I can correct the right hon. Gentleman. I have the actual figures. The actual fall in the price of War Loan, which, I suppose, is an indicative stock, is from 60¾ to 57⅞, or 3 per cent. The fall in the Financial Times index of Government securities is from 80·58 to 79·05, or 1½ per cent.

Mr. Wilson: To what dates is the hon. Member referring?

Sir H. d'Avigdor-Goldsmid: To 28th October, which was the day after my right hon. Friend announced this impending operation, and I am comparing it with 27th February, when the prospectuses were published in The Times. They seem to me to be too fair dates. The fall is 1½ per cent. in the Financial Times index.

Mr. Wilson: I am grateful to the hon. Member. He is not proving anything, except that the figures—

Sir H. d'Avigdor-Goldsmid: They prove the right hon. Gentleman completely wrong.

Mr. Wilson: Not at all. One cannot prove anything about causality by taking the dates at those two different times. Everybody knows that many other factors were at work during that period and that, because of their fears of the effect of this operation, the Government were taking other measures that they would not have had to take to cause an offsetting move in gilt-edged in the opposite direction.
Most people realise that there were great fears that if the Government stood aside there would be a fall in gilt-edged simply because of the banks having to sell gilt-edged stocks in the early months of the year during the tax-gathering period. Obviously, the Government eased up on that, on funding and all the rest, which otherwise they would have done, to prevent their steel transactions having the full effect on the gilt-

edged market which otherwise would have occurred. I was giving what I described as a conservative calculation—a different type of Conservative from the hon. Member—that the effect on the gilt-edged market over this period, allowing for all the factors which I had mentioned, was at least four points because of this operation.
I ask hon. Members opposite to go to their constituencies and honestly admit to their constituents, and particularly to those constituents who have a little stake in the country and have invested in gilt-edged and who were misguided enough to vote for hon. Members opposite in 1959, that these policies have had such a serious effect on the gilt-edged market since that time and have created the hardship which I have mentioned.
I have been dealing with a relatively restricted field of Government action. I have not dealt with the even greater act of pillage to which the Government have committed themselves, the sale of Richard Thomas and Baldwins. In a whole series of debates we have argued unanswerably the case for retaining this fine, successful, efficient and progressive State-owned asset in the hands of the community. In not one of those debates have we had an answer from Members opposite, except that they are to do it—and we know their motives.
No doubt my hon. Friend the Member for Ebbw Vale (Mr. M. Foot), my hon. Friend the Member for Newton and other hon. Members, if they catch your eye, Mr. Speaker, will further deploy the case for this important undertaking. I have been describing a series of operations which involve the taxpayer in heavy losses and which involve vested interests and private speculators in unjustified and uncovenanted capital gains. I have been describing manoeuvres of an extremely malodorous character, and the least the Government can do is to admit the facts honestly and refer them to an independent inquiry.

4.41 p.m.

The Economic Secretary to the Treasury (Mr. Anthony Barber): The term "malodorous" was particularly apposite to the remarks made by the right hon. Member for Huyton (Mr. H. Wilson), at the outset of his speech, about my right hon. and learned Friend the


Chancellor of the Exchequer's visit to Bonn. I do not think that the House would wish me to trouble further about this, except to say—and I am sure that the right hon. Gentleman knows this in his heart—that if it had been possible for my right hon. and learned Friend to be here today to deal with this matter then he would have been here. Anyone who suggests that no useful purpose is being served by his visit to Bonn is talking nonsense.
If ever there was a speech which urged the House to put the clock back, it was the one which the right hon. Gentleman has just delivered. He made it absolutely clear—and I am grateful to him for doing so—that this debate raises a broad basic issue. It is a simple issue. He and his right hon. and hon. Friends want a nationalised steel industry, but the British people do not. I will remind the House of the history of the matter.
In the General Election of 1951, the future of the steel industry was clearly put before the nation. I hope that the right hon. Gentleman will listen to this, as he has asked a number of questions and I am doing my best to deal with them. The Labour Government were defeated in 1951. Then again, in 1955 and in 1959, this was one of the major issues. On each occasion the Conservative Party was returned with an increased majority. It is little wonder that the right hon. Gentleman the Leader of the Opposition himself said, after the last General Election, that nationalisation is a vote loser. Yet his right hon. Friend the Member for Huyton, in defiance of the clearest expression by the British people, still clings to the strange—

Mr. William Ross: What does the hon. Member mean by the "British people"? The Welsh and Scottish people voted against the Government.

Mr. Barber: In the clearest defiance of the British people as represented here in the House of Commons, the right hon. Member for Huyton and his hon. Friends still cling to the strange notion that nationalisation is a modern, up-to-date method of organising the British steel industry. To many people, that is an incredible view. But it is a fact that the Labour Party, and the right hon. Member for Huyton in particular, really

believe in a substantial increase in nationalisation. I am sure that he will not deny that.
I hope that the country will take note, also, of a significant change. It is interesting to note that, in the right hon. Gentleman's view, the test for nationalisation must be: which industries contribute most? My hon. Friends will remember that in the early 1950s the old cry was for the nationalisation of those industries which had failed the nation. Now, in the 1960s, the cry is for the nationalisation of those which serve the nation. We now know exactly where we stand, and so does the electorate.

Mr. H. Wilson: Is the hon. Member suggesting that Richard Thomas and Baldwins is not one of the most efficient firms in the world under State ownership? If he is suggesting that, will he explain how he is arguing the rest of his case?

Mr. Barber: Richard Thomas and Baldwins is an extraordinarily efficient firm which has been doing extremely well.

Mr. William Hamilton: Under public ownership.

Mr. Barber: If the hon. Member for Fife, West (Mr. W. Hamilton) will allow me, I will come to the question of Richard Thomas and Baldwins, which was passed over by the right hon. Member for Huyton. The right hon. Gentleman referred to the importance of the iron and steel industry, and it is true that in any highly industrialised country the proper development of this industry is essential to the well-being of the economy. It does not follow, however, that it has to be nationalised.
We on this side of the House have repeatedly stated our views. I do not want to go over that ground again, but briefly it is that this large and very important, highly diversified industry will make the maximum progress and will best serve the interests of the nation if its ownership and management are left in private hands, subject to the general powers of independent supervision which now rest with the Iron and Steel Board.
As the right hon. Gentleman knows, that policy formed the basis of the 1952


White Paper on the Iron and Steel Industry, and the Iron and Steel Act, 1953, translated that policy into a statutory obligation. In particular, it laid on the Iron and Steel Holding and Realisation Agency the duty of ensuring that the securities and assets which it inherited were returned to private ownership at, as the right hon. Gentleman said, an adequate price. As for the pace of denationalisation, I reaffirm what my right hon. and learned Friend the Chancellor of the Exchequer said on 27th October last—that it is the firm intention of the Government that the work of the Agency should be substantially completed by the end of the present Parliament. Having listened to what the right hon. Gentleman had to say about recent sales by the Agency, I am bound to say that I thought he was, to put it mildly, casting aspersions on the Agency, in view of the terms of Section 18 of the 1953 Act.

Mr. H. A. Marquand: My right hon. Friend referred to the Treasury, not to the Agency.

Mr. Barber: The right hon. Member for Huyton should read again Section 18 of the 1953 Act. That Section clearly lays down that the Agency has certain duties to perform, and that the Treasury has to consider the recommendations of the Agency. I understood him to say that there was something underhanded about these sales. In doing so, he was casting a reflection on the work of the Agency.

Mr. Douglas Jay: Are the Chancellor of the Exchequer and the Economic Secretary now saying that they do not take responsibility for the actions of the Agency?

Mr. Barber: No. I am here to answer for the actions of the Agency. If the right hon. Member for Huyton will look at the duties of the Agency, which are clearly laid down, he will see that those duties have been carried out and that these sales have to take place with the approval of the Treasury.

Mr. H. Wilson: The hon. Gentleman must not shelter behind public servants in this way. The present Government created the denationalisation Act and laid down the terms. They created the

Agency—which we opposed—and appointed its members. The Government have to approve all the Agency's transactions. No doubt they push it forward or hold it back in accordance with various political and other circumstances which they consider relevant. The Government must take full responsibility for their actions, and not shelter behind public servants.

Mr. Barber: I am not sheltering behind public servants. What I am saying—and if the right hon. Gentleman will listen for a moment I will tell him—is what the duties of the Agency are. Under this Section. among other things they are to secure
… without disregard to other relevant matters, that the consideration obtained from the disposal of assets is financially adequate …
That is the duty laid upon the Agency, and I understood the right hon. Gentleman to be saying that the consideration received was not financially adequate. In the view of the Agency it was, and also in the view of the Treasury, which had to approve these sales.

Mr. Jay: Is the Minister saying that, supposing the consideration received was not adequate, or someone thought that it was not adequate, the responsibility would then be that of the Agency and not the Treasury?

Mr. Barber: If the Agency thought that the consideration was adequate and we in the Treasury took a different view and thought that it was not adequate and that the sale should not take place, obviously we would not give our approval.

Mr. Jay: Did the Treasury give approval in this case?

Mr. Barber: Of course we gave approval. I would have thought that it was obvious, as the sale has gone forward, that the Treasury gave approval because it was satisfied that the advice of the Agency was correct.

Mr. Jay: Is it not perfectly clear that it is the responsibility of the Treasury and that all this talk by the hon. Member about the Agency is entirely irrelevant?

Mr. Barber: If the right hon. Gentleman thinks, in view of the terms of that Section, that all this talk about the


Agency is irrelevant, all I can say is that he has no comprehension of the meaning of the Section

Mr. Marquand: Are not the facts that for seven years after the passing of the iron and steel denationalisation Act the Agency, proceeding slowly, had not disposed of more than one-third of the assets which it took over, but that in the last year or two, stimulated and ordered by the Government to get on with it, it has sold the taxpayers' assets at a loss?

Mr. Barber: It is nonsense, and the right hon. Gentleman knows it, to suggest that the Iron and Steel Holding and Realisation Agency takes orders from the Government. That is indeed a grave reflection on the Agency and I am sure that the right hon. Gentleman did not mean it.

Mr. J. J. Mendelson: Is the hon. Gentleman now saying that the Treasury is not encouraging or discouraging the Agency about the timing of its sales? In that case, what about the promises which Treasury spokesmen have given to the hon. Member for Kidderminster (Mr. Nabarro) that these sales will be hurried up?

Mr. Barber: I have not made any promises to my hon. Friend the Member for Kidderminster (Mr. Nabarro), other than to repeat what my right hon. and learned Friend the Chancellor of the Exchequer said. I must get on, because other hon. Members wish to speak and I want now to say something about the extent to which the denationalisation of the industry has already been achieved. There are several yardsticks which can be used for this purpose.

Mr. Ross: The hon. Gentleman has now said that he has made no promises. Does he appreciate that not five minutes ago he said that the sales must be finished before the lifetime of this Parliament?

Mr. Barber: If the hon. Member for Kilmarnock (Mr. Ross) will look at HANSARD tomorrow, he will see that what I said was that I had made no promises other than to repeat the words of my right hon. and learned Friend, and those words were that it was the intention of the Government that the work on the Agency should be

substantially completed during this Parliament."—[OFFICIAL REPORT, 21st February, 1961; Vol. 635, c. 283.]
I cannot go any further than that.

Mr. John Morris: rose—

Mr. Barber: I must get on.
I want now to say something about the extent to which denationalisation has already taken place. There are several ways in which one can measure this, none of them entirely satisfactory. But in terms of steel production, of employment and of sales of products, nearly 90 per cent. of the industry has been denationalised. In financial terms, the Agency has reduced by more than three-fifths the investments and obligations which it took over from the Iron and Steel Corporation in 1953—although those figures under-state the extent of the achievement of the Agency, because, as hon. Members know, it now holds a much smaller share in an industry which in both physical and money terms is much larger than it was at the beginning of the 1950s. Looking at it in another way, of the fifty-five firms for which the Agency became responsible in July, 1953, the Agency now retains the ownership of only Richard Thomas and Baldwins and seven other small companies, one of which is in voluntary liquidation, and fixed-interest securities of a nominal value of £50 million in companies whose control has already been returned to private hands. I would have thought that that was no mean achievement, but I should like to deal with the suggestion that the denationalisation of the industry should have gone forward with even greater speed.
The answer to the suggestion that denationalisation should have proceeded faster, which is certainly the view of some people, is twofold. First, those who criticised the Agency or the Government for the fact that some part of the industry, albeit a relatively small part, is still publicly owned should bear in mind the fact that the processes of nationalisation and denationalisation are entirely different.
To nationalise is simple and straightforward. Parliament legislates and the essence of the legislation is compulsion. An appointed day is named and the transfer of ownership is complete and


there remains, therefore, only the question of the payment of compensation, which of course is not a prerequisite of the transfer of ownership. Denationalisation, on the other hand, is a much more complex affair. Once again, Parliament legislates, but this time the effect of the new law cannot be instantaneous. It still remains for the Government and their agents to find purchasers who are willing to re-acquire the concerns which have been nationalised, and to do so on terms which are not in conflict with other vital considerations, including the proper interests of the Exchequer. To put it briefly, while it is relatively easy, and my hon. Friends may think all too easy, to compel people to sell the assets they hold, it is simply not possible to compel them to buy them back.
Those considerations lead on to the second factor which has hampered the process of denationalisation—that is, the attitude of the Opposition. I recognise that in different degrees the Labour Party is attached to the doctrine of State ownership of important sectors of the economy.

Mr. Ross: So are the Government—the railways.

Mr. Barber: What hon. Members opposite believe in is their business, but it is useless to ignore the fact that some of the statements made over the years by Labour Party spokesmen—not only the threats of renationalisation, but also the irresponsible hints about the compensation terms on which renationalisation would be carried out—appear to have been deliberately designed to impede the implementation of the Iron and Steel Act, 1953. The effect of all that has been only too obvious.
I know that some time ago it was being said that, despite the difficult circumstances with which the Agency had had to contend, it ought already to have disposed of Richard Thomas and Baldwins.

Mr. Bruce Millan: The hon. Member is answering a speech which was never made. Why is he answering in anticipation questions which may come from his own side of the House and not answering the speech of my right hon. Friend the Member for Huyton (Mr. H. Wilson)?

Mr. Barber: I am sorry that the hon. Member for Glasgow, Craigton (Mr. Milan) has not been following what I have been saying. I shall deal later with the question of the adequacy of the prices, which the right hon. Gentleman mentioned. When we are debating the steel industry and particularly the duties of I.S.H.R.A., I should have thought that it was right to look at the matter as a whole, and that is what I am trying to do. Without disrespect to the hon. Gentleman, I am also directing my remarks, as I thought would be apparent to him, not only to his side of the House, but to hon. Members on this side who also take a particular interest in this subject.
The reasons which led to the deferment of the devesting of Richard Thomas and Baldwins are well known. It is engaged at present in a very large development programme, both in Newport and elsewhere, which is designed to meet the needs of British industry. Those developments will have the effect of substantially changing the nature of the company's business and also, of course, of increasing its size.
It follows that so long as those developments were in their early stages, any sale of the company would have had to have been based on estimates and prospects which were necessarily somewhat uncertain, and any sale price for that reason would have been less favourable. It was with considerations such as those in mind that, after taking the best possible advice, the Government came to the view last year, as my right hon. and learned Friend the Chancellor of the Exchequer announced, that the sale of the company should be deferred until these extensive developments were nearer to maturity.
The right hon. Gentleman referred to the case of Staveleys. I would only remind the House that, despite what he said, the facts are that the average profits of Staveleys before tax for the three years to 30th October, 1959, were £1·2 million and that the profits for the year to 30th October, 1959, were only £652,969. As the right hon. Gentleman, I think, knows and would perhaps admit, the company's works are old, and the alternative would have been to have provided considerable new investment for the company.
I should also like to tell the right hon. Gentleman—he asked the question and I wanted to confirm this—that the Board of Trade, and also, incidentally, the Iron and Steel Board were consulted about this sale to Stewarts and Lloyd.

Mr. H. Wilson: The only reason why I raised the question of the Board of Trade was because of this question of monopoly. Would the hon. Gentleman say whether he agrees that a monopoly has been created in the range of products which I have mentioned and whether the Government are satisfied that, that monopoly having been created, they approve the transaction?

Mr. Barber: I assure the right hon. Gentleman that this was one of the aspects taken into account at the time when the matter came to the Treasury for approval. This and other matters, such as the effect of employment, are relevant considerations, but I would remind the right hon. Gentleman that maximum steel prices are, of course, fixed by the Steel Board. The purpose of this is to prevent the abuse of rises in the case where a particular product is manufactured by only one, two or three steel companies. I should have thought that that is operating pretty satisfactorily. If the right hon. Gentleman has any information to the contrary I, and I am sure my right hon. Friend in particular, would be happy to look into it.
The right hon. Gentleman also mentioned Llanelly. Here I would make three points, because this also was a case which we considered with great care when the matter came to the Treasury for approval. The facts so far as Llanelly are concerned are that for the last seven years there have been profits in only three years, and the average profit was only £19,000 a year. Again, a large part of the plant was old and the undertaking was unable to compete economically with more modern steelworks. Finally, and I think that this is perhaps the most relevant consideration of all, during all those seven years the offer of the Duport Company was the only one seriously considered. If the Agency could have got a better offer I have no doubt that it would seriously have considered it, but none was forthcoming.
The right hon. Gentleman talked about the Government engineering a depression and about political gratitude, and so on. All I would say is that this is all good fun but that he knows perfectly well that what has been done by the Agency is perfectly proper and that what has been done by the Treasury is also perfectly proper, although I know that in all sincerity he takes a different view about the policy implemented in accordance with the 1953 Act.

Mr. Wilson: Of course I want to make it quite clear, and the hon. Gentleman is right about this, that no one is making reflections on the Agency. The Agency consists of public servants of high standing. The thought that they had been influenced in any way by political spending by particular companies would be intolerable. I do not think that they would know about that spending. I think that it was the duty of the Treasury and of the Ministers, when the Agency came along with propositions involving highly favourable terms in the case of a company which had been publicly identified with the election campaign, to inform the Agency of these political considerations which would not be its normal concern. On top of that, I think that it was the duty of the Treasury and of the Ministers to veto the transaction because of the fact that that particular firm had been so closely identified with the Conservative Party before and during the election.

Mr. Barber: I am grateful to the right hon. Gentleman for so fairly making that point, which I fully appreciate. So far as the Treasury and its Ministers are concerned, I would only say that if in the view of the Agency a particular sale is considered to be proper and it considers that the price is adequate, and if when the matter comes to the Treasury we take the same view, I should have thought, apart from other considerations, that it was right and proper to let the Agency go ahead, although I realise and accept the fact that we can have different views about this
Now I come to the recent sale of fixed-interest securities in companies whose equity shares had been sold back to the public. The right hon. Gentleman gave details of the sales. I think the House already knows that there were twelve


separate stocks in seven different companies and that the gross proceeds of sale will amount to about £85 million. The right hon. Gentleman asked what was the cost of the operation. He put it in rather more flamboyant terms, speaking about our friends in the City, as he called them. I can tell the right hon. Gentleman that the difference between the gross proceeds of £85·3 million and the net proceeds of £83·5 million, that is, £1·8 million, was the cost of the operation. The main item of expense is the underwriting commission of 1¾ per cent. of the gross proceeds and, of course, there are the other incidental expenses, advertising, printing, bankers' charges, and so on.

Mr. Jay: Presumably that estimate does not include the profit made on sale of the securities afterwards when they have gone to a premium, as they in fact did.

Mr. Barber: No, this is simply the cost of the operation. I do not think that the right hon. Gentleman would expect me to go further on this point, but I should like to say that when this matter was considered by the Treasury this was one aspect of the operation which we considered with great care. I think it is important that I should say that, and I do not say it lightly.

Mr. Millan: Could the hon. Gentleman make that clear? Is he saying that that 1¾ per cent. was the restricted commission in view of the anticipated profit? That is an extraordinary thing.

Mr. Barber: I am not saying anything of the sort.

Mr. David Webster: Can my hon. Friend tell me how long the underwriters had to hold the steel companies' ordinary stock if they failed to sell?

Mr. Barber: I cannot, I am afraid, but I can say that we were absolutely satisfied that the underwriters' commission was satisfactory. Certainly, if I can put it this way, this is the sort of matter for which my right hon. Friend the Chancellor takes responsibility, but it is not the sort of matter on which he makes up his mind without taking advice.

Mr. H. Wilson: I can see that the hon. Gentleman is genuinely trying to answer the question. I do not think it is either

his or my fault that he has not quite taken the point which I put to him, though my right hon. Friend has been trying to help. When I referred to this part of the transaction, which we agree was a very difficult and complex operation, I was referring not only to the commission but also to the fact that, as the operation had been a huge success and as it was possible to unload speedily stocks which in other circumstances might have proved less happy to hold, it was possible to unload them for quite a good appreciation. Is the hon. Gentleman in a position to tell us the total amount accruing to these finance houses as a result of both those factors, the guaranteed commission plus the second point? It may be a difficult point to answer right away, and if the hon. Gentleman cannot give the answer now perhaps he will do so before the debate ends. Perhaps we might be told how much these finance houses made from these transactions.

Mr. Barber: I will do my best to see what I can find out on that point.
I should like now to deal with one or two criticisms which have been made of this prior-charge operation. Some of those criticisms were repeated by the right hon. Gentleman today. First, it is suggested that these stocks should not have been sold. The right hon. Gentleman knows the answer to that. We may have differences of opinion on policy, but the fact is that this very large sale of fixed-interest securities was an essential part of the process of denationalisation. I have heard it said, and I have read it in the newspapers, that the sale of prior-charge stocks is not denationalisation in the same sense as the sale of equity shares.
That suggestion seems to me to be founded on a complete misunderstanding of the 1953 Act which clearly relates to securities of all kinds, whether equity, preference or debenture. It carefully defines "private ownership" as a state of affairs in which the securities of a particular company are not held to any substantial extent by or on behalf of the Crown. It follows from the terms of that Act, and also in terms of common sense, that this is part of the process of denationalisation.
It has also been suggested that we should not have mounted this large operation at this time, and that it would


have been better, if we were going to do it at all, to have waited until the market for prior-charge stocks was more favourable. The first thing I would say on this point is that there exists the statutory obligation to which I have already referred. In the light of the decision which was taken to defer the sale of Richard Thomas and Baldwins, it was clearly right that the Agency should press on with the sale of its other securities if, having regard to the considerations laid down in the Act, it could reasonably and properly do so.
As I said earlier, on the advice available to us we saw no reason to quarrel with the Agency's timing. Furthermore—and this is important—if this sale could be successfully mounted, as it has been, it was obviously desirable that it should take place quickly, because while it was known to be outstanding it was bound to have an unsettling effect on the market for fixed-interest securities.
Finally, there is the question of the price at which the stocks were sold and the assertions that they were sold at less than they cost, and that in consequence the whole operation has involved the Agency, the Exchequer and the taxpayer in a loss of about £20 million, which is the approximate amount of the difference between the nominal value of the securities and the gross sale price which they realised.
I think that anybody who has considered this matter must agree with me that it is very difficult to give any significant figure of what the securities cost to the Agency. I say that because, as the House knows, most of them were created in the Agency's favour as part of the financial arrangements when the equity capital of these companies was sold back to the public.
After all, in 1953 the Agency took over the entire steel undertakings from the Iron and Steel Corporation substantially at cast price, and the price of this take-over was about £244 million net. Since then the Agency has in effect sold these undertakings back to private enterprise in two parts, or in two stages: first, the equity, and then the prior-charge holdings with which we are now concerned. Any split of the cost price to the Agency between those two parts would be quite artificial, and it is fair to say that one can obtain a proper view of what has happened only by looking at the transactions as a whole.
The last accounts of the Agency show that sales of investments in companies where the entire capital has been sold have produced a surplus of nearly £8 million. As my right hon. Friend mentioned, I think at Question Time, the present sale of prior charges will improve that picture because, in respect of four companies in which the Agency will now retain no interest, the transaction will result in a further surplus of nearly £5 million. In the case of the other three of the seven companies with which this operation was concerned, the present indications are that the ultimate proceeds should be not less than the book value to the Agency.

Mr. Jay: Is the hon. Gentleman denying the universal statement in the financial Press that particular stocks which have been sold were new stocks issued to the Agency by the firms concerned; that is to say, the Agency lent £105 million of new money to the firms without any public ownership in return for these securities, and that those securities are now being sold for £85 million? Is not that a fact? Does the hon. Gentleman deny that?

Mr. Barber: I have never denied that there was a difference of £20 million between the nominal value of the securities and the gross sale price which they are realising under this operation but the House must face the fact that many, in fact I should have thought most—

Mr. Jay: indicated dissent.

Mr. Barber: —the right hon. Gentleman shakes his head. I have not said anything. Many of these prior charges, in fact I think most of them, were created in connection with a sale of the equity of the companies, and it would not have been possible in many of these cases to have sold the equity at the price at which it was sold without creating the prior charge.

Mr. Jay: I shook my head because that was not the question I asked. I asked whether it was not a fact that the Agency lent £100 million of new money in return for these securities as a separate and independent transaction, and that it is now unnecessarily selling these securities for only £85 million. Therefore, on the transaction of the prior stocks it has indubitably lost £20 million


of taxpayers' money. Does the hon. Gentleman deny that?

Mr. Barber: I do, because these were not independent transactions. They were part of the operation involving the sale of the equity. Perhaps I might give the House an example, because this is an important point.
Let us consider the case of Consett, one of the four companies in which the Agency holds no further interest since the prior charge in Consett was sold. The compensation paid an nationalisation was £8,300,000, in round figures. New money subsequently provided amounted to £5,100,000. The total investment was, therefore, £13½ million. The equity was sold for £12,750,000. The proceeds of the present sale are £3,200,000, so that the total proceeds of sales are nearly £16 million, compared with a total investment of £13½ million.
That means that in the case of Consett there is a surplus on the books. It is a favourable example for my argument, but I could also deal with Colvilles, Dorman Long and United Steel. It means that there is a surplus of nearly £2½ million.

Mr. Jay: Does not that mean that a profit was made on one transaction on the equities, that a loss was then made on a totally separate transaction on the prior stocks, and that the Government are now trying to combine the two to confuse the issue and prevent the public seeing what they have been doing?

Mr. Barber: That is not so. One cannot treat the sales in isolation. It would not be right to consider the original transaction in isolation. As my right hon. Friend said, these priorcharge stocks were issued in connection with the sale of the equity in most of the cases with which we are concerned.

Mr. Jay: Let us suppose that the Government had carried out the first transaction and had obtained this profit, and had decided not to sell these prior stocks at a loss. Would it not then have been possible to retain the profit in the hands of the taxpayer and not to have incurred the offsetting loss?

Mr. Barber: I am dealing with the suggestion that these prior charges should not have been sold, because they in-

volved a difference of about £20 million between the nominal price and the sale price.

Mr. Jack Jones: This is vitally important. The Minister is now quoting figures regarding the value of these stocks when they were originally bought by the State and their value now when they are being sold to speculators. Will he tell the House their value today compared with their value when the State took over, and subsequently made improvements to the tune of £16 million or £18 million?

Mr. Barber: I was dealing with the suggestion that these sales have not resulted in a surplus. I do not want to take up too much time. I should have thought that if the right hon. Member was engaged in two transactions and, at the end of the day, found that he was in pocket, he would say that he had a surplus. That is the position in this case.

Several Hon. Members: rose—

Mr. Barber: I am sorry; I must get on.

Mr. Jay: I can inform the hon. Member that if I carried out one transaction which secured a profit and there was a prospect of another transaction which secured a loss, I would retain the profit and not indulge in the other transaction.

Mr. Barber: That would be right if they were entirely independent transactions, but they are not in this case. [HON. MEMBERS: "They are."] I am sorry, but I cannot pursue this point.
It has been suggested that the Exchequer has been involved in a loss of £20 million because these securities had been sold for less than their face value. There is no doubt that the price of these securities was in each case less than the nominal or maturity value, but this does not mean that on an overall view the Exchequer has suffered a loss. As the right hon. Gentleman knows, the Exchequer is a continuing borrower on longer-term, both to refinance maturing parts of the National Debt and also to meet the long-term requirements for new money by the nationalised industries, and so on. So long as the Government are long-term borrowers they must pay the prevailing rate for money, and it makes very little financial difference to


the Exchequer whether it does this by issuing new securities on appropriate terms or selling at their current market value other securities which are held on its behalf.
The right hon. Gentleman referred to the Spectator, which made some comments on the sale of prior charges. I think he would agree that all the major newspapers regarded the prices as fair and reasonable. As for the question of the prices, in view of the observation of the right hon. Gentleman I would say that I do not accept that the subsequent course of trading casts any doubt on the judgment of those who were concerned in arranging the details of this offer. As the right hon. Gentleman pointed out, when trading in these securities first began they went, with one exception, to a premium. Since then the prices have fluctuated, and some have been below the paid-up issue price.
Even at the middle price, at the close of business yesterday one of them—the Steel Company of Wales Debenture, which makes up 40 per cent. of the total packaged—was still at par. It is true that the remainder were at a premium, but looking at the matter in proper perspective and having regard to the full offer price and not merely to the amount which has so far been paid up, these premiums cannot be regarded as remarkable. This is a large operation. In fact, it is the largest offer for sale of industrial securities ever undertaken in this country. It has made an important contribution towards the implementation of the policy of denationalisation to which the Government are committed and which we expect to see substantially completed during the lifetime of this Parliament.
I know that the right hon. Gentleman is in the van of that movement in the Labour Party which wants to see a substantial increase in the area of nationalisation, but the Conservative Party believes that such a policy not only runs counter to the repeatedly expressed wishes of the electorate but would spell disaster for British industry and consequently for the prosperity of the British people. For these reasons we mean to continue with the process of returning the steel industry to private ownership.

5.25 p.m.

Mr. W. E. Padley: The Minister began by saying that this policy of legalised plunder of public assets could be justified because the British people had not woken up to the facts. He was challenged by my hon. Friend the Member for Kilmarnock (Mr. Ross) who pointed out that there were Welsh and Scottish people as well as English people, and I must point out that in the great coal and steel basin which my hon. Friend the Member for Aberavon (Mr. Morris) and I represent, equally with the great steel centre of Ebbw Vale, there is an acute awareness of what the Tory policy signifies.
In reply to questions put by my right hon. Friend the Member for Battersea, North (Mr. Jay), the Economic Secretary insisted that most of these offers concerned the resale of assets taken over at the time of nationalisation. Later on he admitted that the Steel Company of Wales debenture of £40 million was 40 per cent. of the total. To anyone who has followed the history of the Steel Company of Wales it must have become apparent that at least the £40 million represented by the Steel Company of Wales debenture was taxpayers' money, loaned by the State, which is now being sold at a loss of £5,200,000. Looking at the history of this company one finds that its major works were sited by State planning decisions. Margam, Trostre and Velindre were built, in all their phases, largely with public capital.
The companies which came together in 1947–48 brought £12 million of capital into the venture. Today, the fixed assets of the Steel Company of Wales approach £200 million. That company prospered under Labour and nationalisation, and under public ownership even though the Tories have been returned to power, as Richard Thomas and Baldwins is still prospering. In March, 1947, the £40 million of State capital was sold to private shareholders. This present £40 million debenture is the second £40 million of the taxpayers' money being sold to private persons. The £40 million sold in March, 1957, became ordinary share capital.
What has happened since then? In 1957 the dividend paid on that £40 million ordinary share capital was 8 per cent.; in 1958 it was 9 per cent.; in 1959


it was 10 per cent. and in 1960 it was 12½ per cent. If we contrast that 12½ per cent. dividend on the £40 million of ordinary share capital with the previous interest charges under nationalisation, we find that the additional financial burden on the company is equivalent to £1 for every one of the 3 million ingot tons of steel which the company is now producing. An additional financial burden of £1 per ton has been imposed as a direct consequence of denationalisation.
Expressed in another way, it is the equivalent of £3 per week per head of the 20,000 workers employed by the company. That £40 million of State capital sold to private shareholders in March, 1957, is today worth roughly £95 million, a tax-free capital gain in a period of four years of £55 million; the equivalent of £2,750 per head of the workers employed by the company.
Now, a second £40 million is to be sold, this time at a loss to the taxpayer of £5,200,000. So it is fair to say, with regard to the Steel Company of Wales alone, that the policy of the Tory Government has resulted already in a plundering of the public purse to the tune of just over £60 million. There will be £45 million of the taxpayers' money still remaining in the Steel Company of Wales even after this transaction is completed. With the repetition by the Economic Secretary of the pledge by his right hon. Friend that the remaining capital is to be sold before the end of the present Parliament, no doubt it means that another—what, £5 million or £6 million—will be lost to the taxpayer. Really, this is a most sordid story.
When one realises the magnificent achievements of the Welsh steel industry together with the rest of the British steel industry, the nationalised section represented by Richard Thomas and Baldwins equally with the so-called private enterprise of the Steel Company of Wales—public ownership and private control up to now; when one contrasts the magnificent efforts of management, technicians and workpeople of all kinds with this sordid financial story, it is a great indictment of the Government. I hope that the House realises that the story of the Steel Company of Wales—

far and away the biggest of the many scandals involved in steel denationalisation—will be repeated in the case of Richard Thomas and Baldwins. The Llanwern Steel Works were sited there, as were the Margam Steel Works, by a State planning decision. They are to be built at a cost of £119 million—the last figure coming from the Treasury Dispatch Box—of public money; up to £70 million by way of straight loan from the Treasury and the rest of the capital to be found from the internal resources of Richard Thomas and Baldwins and, if necessary, of the Iron and Steel Holding and Realisation Agency.
If the present Government continue on their merry way, and Richard Thomas and Baldwins is to be denationalised, no doubt we shall first get an issue of ordinary share capital of £30 million or £40 million—and some appreciable capital gain will be made on it—and at a later date the loan stock will be sold, and again one can be certain the story of the Steel Company of Wales will be repeated. It will be sold at what the City Editor of the Daily Mail called "bargain-basement prices" and even the Economist, which is more cautious, referred to this recent transaction as the "steel supermarket".
We can be sure that the great Llanwern Steel Works, built with £119 million of the taxpayers' money, will be the subject of legalised plunder to reward the vested interest standing behind the party opposite. This really is one of the great scandals of the century. I hope that we on this side of the House will recognise that the scandal of steel denationalisation and the plundering of the public purse is a first-class case to argue throughout the country. I hope, also, that we shall realise that when we are dealing with the issue of public ownership of steel, we are dealing not only with the public ownership of an important industry but also with the heart of British capitalism and the power of the party opposite. I hope that this challenge on the subject of steel today will be followed up in the months to come, because this is a great indictment of the Government who should be the custodians of the taxpayers' money.

5.36 p.m.

Sir Henry d'Avigdor-Goldsmid: It is a pleasure to follow the hon. Member for Ogmore (Mr. Padley),


who, I think, has put his finger on what is the basic unreality of this debate. We have been discussing the sale of £105 million, nominally, of shares which really have nothing to do with the steel industry at all.

Mr. Jack Jones: Oh.

Sir H. d'Avigdor-Goldsmid: I am sure that the hon. Member for Rotherham (Mr. Jack Jones), with his great knowledge of the steel industry, will be able to follow me. Those shares represent no element of control whatever in the industry. So long as they earn their dividends, no element of control attaches to their owners.

Mr. Jones: Is the hon. Member starting off by trying to make out a case that the Stock Exchange does not reflect prices, equity value and profitability of the various concerns making steel? Is that the argument?

Sir H. d'Avigdor-Goldsmid: With respect to the hon. Gentleman, he has not followed me. At the moment, I am addressing myself to the £105 million prior charges, the preference shares and the debenture stock. The hon. Member, with his knowledge of the steel industry, will know that the ownership of these shares has nothing whatever to do with the industry, or with its profitability. It is only if the steel industry were to meet a serious depression, as happened in the 1930s, that any element of ownership might attach to them at all.

Mr. Frederick Lee: Will the hon. Gentleman say why it is necessary, in carrying out the Government's policy of denationalisation, to sell these at all?

Sir H. d'Avigdor-Goldsulid: I am grateful to the hon. Member. That is exactly the point I am coming to. In my opinion, this is a wholly unnecessary and irrelevant sale. I will give my reasons for saying that.
As I have told the Economic Secretary privately, this is an act of financial masochism by the Government. It is a self-inflicted wound. Why are the Government inflicting this wound on themselves? Why is the Treasury selling stocks which pay 7⅛ per cent or 6⅝ per cent.? It is to get some money in. What are they proposing to do with the money? It will be available to be lent,

probably to Richard Thomas and Baldwins, and it will be charged to Richard Thomas and Baldwins not at that rate, but at the current market rate of Government lending—probably 5½ per cent. or 5¼ per cent. What is the object of this manoeuvre? This is being done because as far back as 18th February, 1960, a year ago, we had a debate in this House on the Iron and Steel (Financial Provisions) Bill, which dealt with the advance of £70 million to Richard Thomas and Baldwins.
On that occasion, I thought that my right hon. Friend the Minister of Power received fairly rough handling. He is a man of the utmost physical and moral courage and I am sorry that he has not told the House today, "I want more money for Richard Thomas and Baldwins and, therefore, we will have a Bill to lend more money to Richard Thomas and Baldwins". Instead, the Iron and Steel Holding Realisation Agency is drawing about £85 million from the sale of these irrelevant prior charges in order to have the money available in the "kitty" to lend for the development of Richard Thomas and Baldwins, without going through the formality of a debate in this House, which would raise the same questions which the debate a year ago raised, as to what extent the House is committed to the financing of the nationalised industries.
On 27th October, the Chancellor of the Exchequer, in reply to a Question from my hon. and gallant Friend the Member for South Fylde (Colonel Lancaster), said:
The Government have decided that in all the circumstances it is best at the present stage to give priority to the sale of the fixed interest securities which the Agency holds in companies already denationalised."—[OFFICIAL REPORT, 27th October, 1960; Vol. 627, c. 2563.]
That was more than four months ago. My hon. Friend the Economic Secretary has referred to the speed with which the operation was carried out, but, in fact, four months elapsed from 27th October, when the public announcement was made at that Dispatch Box of the impending sale of these securities, until 27th February, when the prospectuses were actually published.
What happened in the meantime? The right hon. Member for Huyton (Mr. H. Wilson) said that the gilt-edged market


fell by 4 per cent., and I was able to correct him on that point. There was a fall in the market for fixed-interest securities, for the obvious reason that institutions, insurance companies and pensions funds, which are the users of these securities, made room for them, but they had to sell their own securities to make room for them. I think that the Treasury ought to agree that four months is a longer time for a transaction of this kind than should be tolerated.
If the decision was announced on 27th October, I suggest that certain preparatory work could have gone on before that date, and that it would not have taxed the resources of the City to have dealt with that issue within six weeks of the announcement. If it had been dealt with within six weeks of the announcement, we should have been able to obtain a more satisfactory price for the securities.
Hon. Members opposite have agreed with me so far, but they will not agree with the rest of what I have to say, and I give them that fair warning.

Mr. Jack Jones: I have not agreed with everything the hon. Gentleman has said up to now.

Sir H. d'Avigdor-Goldsmid: Thank you. The special features of this sale are, first, that the payment for these securities is spread over a period ranging from now until October; in other words, allowing instalments to be paid on various securities in the Steel Company of Wales, for example, which will not be finally paid for by the insurance companies and pension funds, who will be the ultimate buyers, until October. This is a very convenient arrangement from the point of view of the buyers, because they are making the payments as they receive funds, which fits in with their cash flow and obviously suits them. At the same time, it seems to me that it also immobilises some element of their funds for this further transaction, for which, despite the speech of the hon. Member for Ogmore, the public has voted in no uncertain voice in three successive General Elections.
This is an old bogy, and I am very pleased to be able to argue it again now, because I am perfectly confident in my views. If the public have said

it three times, it is so, and in 1951, 1955, and 1959 the public said with an absolutely certain voice that it wished to denationalise steel. We want to denationalise steel, the public wants to denationalise steel, and this party will do it, and all these irrelevancies about prior charges in the steel companies have nothing to do with denationalisation.
We have still in the "kitty" the great firm of Richard Thomas and Baldwins. My mind goes back to the 'thirties when Sir William Firth tried to reorganise the company when that firm was hit very badly. I was a shareholder at the time and remember it very well. It was not a happy time for the shareholders. One must feel a bit romantic here, because of the immense strides which this great company has made. I have been looking at the figures of Richard Thomas and Baldwins, and, although we are promised by my hon. Friend the Economic Secretary that he cannot take any steps to denationalise it until we see how the developments are working out—perhaps I misquoted him, in which case I apologise—and although we stilt have to wait to see how the development works out, according to the chairman's report, which I have here, it will be a very long time indeed before we see the financial effects of this development.
Mr. Eley said:
But the weather during the autumn and winter has been extremely unhelpful. Owing to this and some other circumstances beyond the control of your company, the plant will be later in coming to completion than had been planned. With reluctance we have been forced to recognise this, but every effort will be directed to reducing the delay.
This is the first task—the plant for which the original credit of £70 million by the Ministry of Power was voted a year ago, and there have been further developments since then. In a Written Answer by the Minister of Power on 26th October, he indicated that Richard Thomas and Baldwins would look to I.S.H.R.A. for further financial help far beyond the £70 million which we talked about a year ago. I have no doubt that the sale of preference shares was one of the things out of which this sum was to be provided.
I want to ask my hon. Friend the Economic Secretary whether he thinks that he would be in a better position


this time next year, or this time two years hence, to say that Richard Thomas and Baldwins had then reached full development and its position can be properly evaluated. My guess is that he will still be dealing in uncertainties, though he will still have the great dynamism of that company which we all admire, and the management will still be dealing in uncertainties.
Looking at the figures of Richard Thomas and Baldwins' balance sheet—and I think the hon. Member for Rotherham will be interested in these—I find that the assets of R.T.B. are £114 million at the moment, and the net assets, after deducting liabilities, are £65 million. That is represented by about 10 million ordinary shares, so that we can say that the asset value there is about £6 per ordinary share. Now we are to spend £70 million on further developments, and after that there will be a further instalment. Until then, in my opinion, it will not be possible to judge whether any element of profitability is being added to the ordinary shares by this enormous development, but one thing we do know is that any assets that have been paid for already are in these days more valuable than those that are now being added at great cost.
Having said that, my guess is that in a year or two's time we may see a balance sheet of Richard Thomas and Baldwins very substantially inflated on each side, but with no greater net assets than £6 per ordinary share. Now let me look at the earnings. At present, the board of Richard Thomas and Baldwins is in the happy position of being able to look to the Iron and Steel Holding Realisation Agency for the capital funds which it wants, and to pay absolutely minimum dividend. It pays a dividend of 13½ per cent., which takes about £900,000 out of earnings, after tax, of £8 million.

Mr. Jack Jones: And a good job.

Sir H. d'Avigdor-Goldsmid: I am sorry, but I must address myself to a financial argument.

Mr. Jack Jones: The hon. Gentleman is saying that the company pays so much taxation out of £8 million. I say that that is a good job done by those people and by their dynamism and that of the

workpeople. It is a good job for the State.

Sir H. d'Avigdor-Goldsmid: I am not questioning any of those things. What I am saying is that at present the dividend paid by Richard Thomas and Baldwins is literally a negligible contribution. It makes life very much too easy for the board. I know hon. Members opposite will not agree with me, but the fact is that in a competitive society—and we live in a competitive society—a board must be concerned not only with the profits it earns, but with the dividends it can pay. There must be correlation between the two.
It would seem on these figures that they could perfectly well justify a price of about £6 for the equity in Richard Thomas and Baldwins. If it were sold there would be a dividend of 13½ per cent., a net return of about 2 per cent., which would be covered nine times. I think that something on that basis could be done because in these days people take a long view. They are prepared to leave their investments in the company to fructify as it should, but no one would invest in steel shares today with the expectation of a high return. I have taken the figures from the Iron and Steel Review and I find that about 70 per cent. of the capital used is generated inside the industry. No one would buy for the sake of the yield, but he would buy for the sake of having a stake in a growing industry.
I wish that we would not always think in terms of speculation. This is a company whose capital has a value of £60 million and it is only the insurance companies, pension funds and those institutions which embrace almost the entire life of the people of the country which can place investments on that scale. Animadversion has been made to the fact that these steel preference stocks were sold at a discount. I suggest that when it tames to selling the equity of Richard Thomas and Baldwins it would appear from the Report of the Iron and Steel Corporation of Great Britain, Cmnd. 198, page 87, to stand in its books at £23 million. There would be a very healthy profit to the Iron and Steel Holding Realisation Agency if that great company were eventually resold to the public. It would seem to be conclusive that there


is no virtue in keeping one single company nationalised when the rest of the industry is denationalised and subject to the same competitive strains as the rest of the economy.

Mr. Millan: Assuming that there is one virtue, the very virtue the hon. Member has mentioned, there are very considerable prospects of the value of the company going up over the years. If it is not a question of a quick income yield, there is, of course, the capital appreciation, as he said.

Sir H. d'Avigdor-Goldsmid: The hon. Member is very knowledgeable in these matters and must be aware of the fact that in that company which is near his constituency, Colvilles, there is a continuous growth. That growth is not limited to a company in national ownership, but is common to all well run iron and steel companies. Therefore, I say there is no virtue in keeping one company nationalised. [HON. MEMBERS: "Oh."] Hon. Members opposite want to go on fighting the battle of 1951, 1955 and 1959. I wish them luck. Although I admire their heroism and lack of contact with reality, and salute them as brave men, I do not admire their political acumen on this point.
There was a debate in the House a great many years ago in which Charles James Fox, speaking on a commercial treaty between Britain and Ireland, said:
I will not barter English commerce for Irish slavery. That is not the price I would pay, nor is this the thing I would purchase.
I say to the Economic Secretary that he should not barter the principles on which we fought the General Elections of 1951, 1955 and 1959—and won them—for an indigestible mess of preference shares.

5.56 p.m.

Mr. Jack Jones: The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) is well versed in high finance. I happen to be a very humble chap well versed in making steel and all that goes therewith.
When history is written the story of the denationalisation now being conducted by the Government will prove to be one of the most sordid stories ever written about politics. Many of my colleagues are wondering why the Govern-

ment have gone on with this job. There is a very simple reason. The hon. Member for Walsall, South suggested that there is no virtue in keeping one company nationalised. I suggest, simply and sincerely, that there is a lot of virtue in it. If the nationalised companies can remain in being they will prove beyond peradventure and any shadow of doubt to everyone in the nation that they have been, are and will be an asset to the nation. That is what is worrying the Tory Party.
I remember having the great honour of following the right hon. Member for Woodford (Sir W. Churchill) in the first steel debate in this House. He at that time prognosticated and forecast that if we dared to touch this industry or to nationalise one part of it overnight it would become decadent, inefficient, effete and all the rest of it. Yet here we have, after many years of nationalisation, hon. Members soaked in blood as blue as bilberries talking of the dynamism and wonderful success of parts of the industry. This is in 1961 and it is quite a different story.
I go back further than the Socialist take-over of the iron and steel industry. The Tory Party assumed that we stole something, but we bought it. We bought for this nation what had been stolen From the nation. Fifty years next Wednesday I started work in the steel industry. I was then a simple lad singing in a church choir. I was a simple fellow and used to listen to the parson reading from the good old book. Every Sunday I used to hear the expression:
The earth is the Lord's, and the fulness thereof; the world and for they …
meaning all of us—
that dwell therein".
The Tory Party got it wrong when they thought that that meant the lords physical, but I as a choirboy knew that it meant the Lord spiritual. The Tories got possession of the earth which belonged to the people and the God-given iron ore. I suggest that we did not steal anything but bought what originally should have been ours.

Mr. Nicholas Ridley: The hon. Member talks much about speculation, but would he not agree that the act of buying is itself one of speculation? It is not the act of selling but the act of buying these


shares in the first place which was speculation.

Mr. Jones: We had to bring in an Act to buy something which originally belonged to the people. We still have the conviction on this side of the House that we should nationalise steel. What is wrong with that? People are entitled to their political convictions.
I do not blame the Tories for wanting to denationalise steel and skim the cream off the milk. Some people might ask why the Tories do not go ahead and denationalise the railways and the coalmines at the same time. There is a simple answer to that. If the Tory Party is convinced that denationalisation will mean success for the steel industry, why does the State still own the railways and the coal? Most people know why. Those undertakings were left in such a shocking condition that it would take years and years and thousands of millions of pounds to put them right. That state of affairs resulted from the inefficient way they were run under private enterprise.
The steel industry is a very complex industry. Some people on the Tory benches would have us believe that there is some internal competition inside it. I ask them not to give us any more of that nonsense. One of the greatest achievements of the nationalised part of the industry has been to do as well as it has done in view of the fact that it has to depend completely for its raw material supplies on those who control the whole iron and steel industry—B.I.S.R.A. and B.I.S.C.O. Those undertakings buy iron ore, scrap, iron ore, fluorspar, limestone, etc., in bulk. The nationalised part of the industry, not because of the Government but in spite of the Government, has gone ahead and done extremely well.
The Tory Party is entitled with its majority to take back the ownership and control of the steel industry and the exploitation of this country's God-given ore. I know that people do not like to have it put to them this way, but these are the simple facts, as I see them. I shall not go into the ramifications of who bought what, this that and the other, and paid 2s. 6d. a week and 2s. on account. I know what they did. They bought out control of this industry. The hon. Member for Walsall, South

said that the rest of it does not matter. He asked why only one unit of the steel industry should remain nationalised. He talked about assets, liabilities, profits, etc. I do not want to hear any more of that type of argument. I am no financier, but I can reckon up what it costs to live every week and what is left at Christmas.
The Chancellor of the Exchequer is being encouraged to keep a kitty out of which those who have the shares and control can draw as and when they want to increase and maintain their efficiency. The price which is now being paid for the steel industry is nothing like as good as it should be, even with all the fiddling which is taking place, having regard to the terrific amount of money which has been put into the industry since it was nationalised. That is an indictment of the Tory Party.
When the war was over we found ourselves with a steel industry which could in no way supply the needs of full employment. I had the honour of being in the Ministry of Supply then. I know something about what we had to do to get steel from America, Belgium, Luxembourg and other countries. It is the old story of the azalea class of goods. To get steel from Belgium to keep men in employment, we had to take the azalea class of goods—shrubs, bulbs, lipstick, and a lot of other useless articles we could have done without. Unless we took those goods from Belgium and Luxembourg we could not have steel.
We bought 1 million tons of steel per annum from America. How did we pay for it? The Americans insisted that we should pay for it with out strategic copper reserves, the copper which we had left at the end of the war, which was a tremendously valuable asset to this country. We had to disgorge that copper and let it go to pay for steel, some of which is still in this country today. I can take hon. Members to it and show them that it is not even fit for scrap. It is lying about in my constituency and elsewhere. We paid for it with copper which was dug by the forefathers of the men in Rhodesia who today cannot have a vote.
Hon. Members can shake their heads at me, but these are facts. Copper mined in Rhodesia was used to pay America for steel which the industry at that time,


which the hon. Member for Sheffield, Heeley (Sir P. Roberts) knows something about, could not provide because of its inefficiency.

Mr. John Farr: On a point of order. Is it in order to talk about copper in an iron and steel debate.

Mr. Deputy-Speaker (Sir Gordon Touche): The hon. Member for Rotherham (Mr. Jack Jones) has said nothing out of order.

Mr. Jones: The hon. Member for Harborough (Mr. Farr) wants to know if it is in order for facts which he does not like to be mentioned in the House of Commons. Without copper there is no brass, and without brass there is no steel. "Brass" is another commodity. I never got any "brass" unless I made some steel. I sometimes got damned few coppers when I was out of work.
I shall now return to the fiddle which is going on. I do not blame the Tory Party. I blame the people who gave them the power to do this. My hon. Friend the Member for Ogmore (Mr. Padley) put his finger on the pulse. When this story is told, as it should be told and will be told, and the electors learn exactly what is happening to the thing they should be proud of—one of their greatest assets, the steel industry—there will be a different story. The story was told at the last election in the steel constituencies—Swansea, Ogmore Vale, Ebbw Vale, Scunthorpe, Penistone, Rotherham, Motherwell and Llanelly. I ask hon. Members opposite to go to the steel constituencies, where the story was told, and I challenge them to return and tell me that the people there voted for denationalisation. I do not want to hear any more of that nonsense. There are hon. Members sitting on the benches opposite who are good personal friends of mine, but they dare not go with their story and fight an election in a steel constituency. They prefer to go to constituencies where people get the benefit of the work of those who sweat and toil. This story will be told.
The steel industry is an efficient industry, despite its defects. It has plenty of defects. I want to say this to the House with all the sincerity at my com-

mand. Since nationalisation and the threat of further nationalisation, there has been a tremendous improvement inside the industry in the conditions for employees. If nothing else has been done, that has been done. I give credit to the management for it. I work for a board of directors. I was there less than seven hours ago. I was working there this morning. I came to the debate by plane. I give the board of directors credit for having taken cognisance of the fact that much needs to be done to improve conditions within the industry. They are good businessmen and good Tories. If someone is a Conservative, he conserves and keeps—get hold and keep.
The Tories lost something, and now they are getting it back. Of course, the Tory Party intends to do it. I will not go into the figures. They have been stated quite plainly by other hon. Members. We have heard about the asset values. My point is that it all comes back to the simple God-given material which was put there for the benefit of the State. Why should not ore be turned into steel and steel be turned into goods to be exported to pay our way overseas?
The Chancellor of the Exchequer has gone to Germany. He will learn much there. The Germans are reducing their prices every week. They are running rings round us. Some hon. Members in the House, like myself, know of the technical advance going on in Iron Curtain countries. As a nation—not as a party, but in the common interest—we cannot afford to continue with the idea that our greatest assets should be used for profitability alone, particularly for the profit of people who contribute nothing to the actual making of steel. That is a simple proposition to state, but it is true.
I have friends who boast of the profits to be made on the Stock Exchange. They are good personal pals of mine. They play golf, fish and grow roses. They argue about all the things about which human beings argue. We part company on the question of ownership and control. They laugh and say to me, "Jack, if you had put £1,000 in this three months ago you would have had £1,400 today. If you had put £500 in that, you would have had £1,100 in a month's time". Can this country afford


to allow this tremendous profit making to go on? Can the country afford the Stock Exchange fiddle which is going on?
This morning I saw a thousand tons of ore going over the weighbridge—but what else did I see? I saw the cost of mining it, and of smelting it and of refining it. I saw the cost of the trade unionists' wages. Some may say the "greedy trade unionists", but who is to stop the trade unionists going for more money when they see men like Clore clawing in a million quid almost over-night? The trade unionists also see all the directorships and the other things that are going on. One day we shall find ourselves unable to compete with those nations that do not allow such things to happen.
I have a final word to say to the Tory Party. I have recently seen the grins and grimacing of people who think that from the Labour Party's present discomfiture some advantage will accrue to the Tories, but let no Tory think that the sort of action we see today, plus taking advantage of a weakened Labour Party, will be to the ultimate advantage of the Tories. There is a greater menace.
There is only one alternative to a decent, live, democratically elected Socialist Party—those who will not talk of compensation but of confiscation, and up against the wall if a man does not like it. I hate to use these words, but the sort of action we see today, especially if it is to continue, will encourage an attitude of "Why should we care?" in the hearts and minds of these men.
The Economic Secretary should get the Chancellor of the Exchequer to write a simple letter to all the steel workers in the following terms:
From the Chancellor of the Exchequer to the steel worker.
Dear Sir and Brother"—
that is the usual trade union term—
Many thanks for the fact that you have not threatened to strike because of the fiddle taking place in the industry. I am delighted to learn that you agree with us that what we are doing is the right thing. Please do not write to tell me that your grandmother is worried about paying 2s. for a prescription that should only cost 1s.; please do not tell me that because of lack of employment in the motor industry your cousin is out of work at Liverpool or Coventry. I know. But, once again, many thanks for having put up with what the Tories are putting on you. Continue to sweat

and strain and work, and the fiddlers on the Stock Exchange will be greatly obliged.
Yours, most faithfully and gratefully, the Chancellor of the Exchequer.

6.13 p.m.

Mr. David Webster: It is always a great pleasure to follow the hon. Member for Rotherham (Mr. Jack Jones) with his vigorous and expressive turn of phrase. I was interested in his frequent use of the word "fiddle". A large number of steel workers took up the ordinary shares of the steel companies before the last General Election, and have kept them. I would not say that they were fiddlers. A lot of people of limited means have taken up the shares issued three weeks ago. I do not call them fiddlers.
I want to congratulate the Iron and Steel Holding and Realisation Agency for the very fine way in which the terms were set for the denationalisation of these fixed priority stocks. Until the actual issue took place and subscriptions were asked for, it was practically impossible to predict whether it would start at a premium or at a discount. In fact, eight started on a very small premium, and one on a very fractional discount. That shows that the terms were pitched very finely and equitably, and in the way that was fairest to the British shareholder and the British taxpayer. That is a very fine achievement and not half enough thanks have been given to the Agency for the way in which the operation has been carried out.
In terms of interest, the average yield on its stock is about £6 19s. per cent. That may seem rather high, but on Bowater 5½ per cent. the yield is £7 5s. 6d.; on Dunlop 5½ per cent., it is £7 4s. 3d., and on Imperial Tobacco 6 per cent., it is £7 3s. 3d. Those are higher yields on equally well-known stocks, and I think that the terms here have been pitched very adequately indeed.
It has not been a speculative issue, and despite what the right hon. Gentleman the Member for Huyton (Mr. H. Wilson) said, there has been very little capital gain on the issue. The right hon. Gentleman very subtly juggled with the figures to make it appear that on a 10 per cent. payment there is today a premium of 20 per cent., but he has, in


fact, inflated the figures tenfold. I respect his ability to do that, but I do not respect his figures.
What has been done has reduced the taxpayers' burden by £85 million, and has increased the savers' investment in the steel industry. Hon. Members opposite are always crying out for more investment in the country's basic industries, and it is very regrettable that they should attempt to deny to ordinary people the right to take up that investment. I look forward to the future when the will of the people is carried out—

Mr. Jack Jones: I should like to tell the hon. Gentleman that in the works in which I am employed the savings of the steel workers are the highest in the north-east of Great Britain. They already have every opportunity they wish to invest in a prosperous State, and are encouraged to do so.

Mr. Webster: I am very glad. I hope that they will invest in the companies for which they work, because I believe that to be one of the best ways of achieving adequate labour relations.
Today we are coming to one of the most exciting stages in the expansion of our steel industry. Production last year was 24·3 million tons of crude steel, and I gather that this will go up slightly to 24·5 million tons this year, of which 4·1 million tons will be for export. That is a very fine record. It is the highest ever achieved. It is 20 per cent. over the previous year, and 12 per cent. over the previous record in 1957. That shows the expansion that is taking place in the industry, and it is expansion that is continuing at a very high rate.
At the end of the year we shall have a capacity of 27 million ingot tons and in the mid-sixties a capacity of 34 million ingot tons. That shows the confidence the industry has in its own future, because present estimates are that in the mid-sixties the home demand for steel will be 25 million tons and that there will be exports of 5 million tons. That all shows a great deal of faith. There will be surplus capacity, which may require some scrapping in order to keep the industry completely up to date.
Just as our strip mills are the envy of the Continental firms in the Coal and Steel Community so we are anxious to

catch up on sheet steel capacity, and it is noteworthy that £200 million is being invested within the industry this year. I think it right that this should be by voluntary effort and not by State effort. We are having to compete with a rapid development in the Coal and Steel Community, where production has gone up from 40 million tons in 1950 to 70 million tons last year and is expected to reach 100 million tons by 1975. It is therefore obvious that we really have to invest very fast and keep our industry as modern as possible to compete, as we shall do. I have great faith that the industry will keep ahead of its competitors.
The problems facing the Coal and Steel Community are similar to our own, and there are many hon. Members who would like to see closer ties with the Common Market, or the Community as they call it. That is often difficult to do politically. It is frequently much easier to do it by economic methods, and I hope that something can be done to associate ourselves with the problems that the Coal and Steel Community now faces, which, as I say, are problems very similar to our own.
We have very little to fear on prices. We have a very fine record in the industry. Taking 1938 at 100, in 1958 the figure would be 93·7 in this country. In the Common Market it would be 106. In the United States it would be 118·3.
There is great danger today because costs, labour costs in particular, are rising. The wages bill went up by £22 million last year. The fuel bill went up by £19 million. This is a matter of considerable anxiety within the industry.

Mr. George Lawson: The hon. Member is comparing prices with 1938. Will he compare prices with a much more recent year, perhaps, 1951 or 1954? Could he give us an idea how the British gap has been narrowing or widening in relation to Continental prices?

Mr. Webster: I am sorry not to be able to oblige the hon. Member. I have many documents here, but I feel sure that by the time I had scuttled through them all the House would long since have lost patience with me.
It is notable that so much of the expansion of the industry, two-thirds of


it, is self-financed. When we are told about speculators and about capitalists bleeding the industry white, it is well to remember that many of the dividends are covered twofold, threefold or sometimes even fourfold. This is a voluntary process, allowing profit to be reinvested in the industry. It is one of the best records in British industry, and I think it should be emphasised when there is so much talk about fiddling, jiggery-pokery and speculation.
For the ten largest companies last year there was a trading surplus of £115·3 million. Taking away normal depreciation of £29·8 million, a net profit of £85·5 million is reached. From that one takes taxation of £38·8 million, leaving £46·7 million. Exceptional credits are added. Then special depreciation and other reserves are taken away, with the final result that out of the original £115·3 million there is a dividend payment of £13·9 million. That is not skimming the industry.
Technically, the industry is probably going through its most exciting phase. The developments in steel of the last 100 years began in the period 1856–78 with the acid and basic Bessemer processes and the open hearth processes. These dominated the industry, it is fair to say, until the First World War when the electric arc process came in as well. In fact, the basic Bessemer process, which dominated so much of European production, was invented by Gilchrist Thomas, a Britisher. It is known as the Thomas process in Europe, quite rightly, and it certainly brought competition for our own industry.
After the 1914–18 war, we had our own troubles with the Bessemer process, and it was suspended for many specifications by the British Standards Institution. It came back into use in 1934 at Corby and in 1938 at Ebbw Vale, but still it had its limitations because it produced a steel with too much nitrogen which was too brittle. The limitations were very serious. However, the process had the advantage of lower capital and running costs compared with the open hearth process which is easier to control and produces for its type of ore the best quality steel.
On the Continent, people have been concerned because they have not been able to produce steel of adequate quality

at the right cost. The Austrians, in particular, by blowing hot air through the electric arc furnace have managed to produce a more efficient steel. They have now gone one stage further and, by blowing oxygen and steam through the furnace, they are able to produce a milder steel of better quality which is known as "better blown steel," as the hon. Member for Rotherham knows very well.
The exciting factor is that the Continental countries have set us a great challenge, and the British steel industry is today rising to that challenge. It is adopting the L.D. and Kaldo processes, using a supersonic oxygen jet on to the liquid pig iron, and this has a great advantage because of the low quality of British ores which produce almost the lowest quality pig iron in the world.

Mr. Jack Jones: The hon. Member will be aware that I myself at the Dispatch Box opposite years ago, and ever since, have talked about our need to use oxygen induction. I have advocated its use for fourteen years. Now we are beginning to think about it.

Mr. Webster: If I may say so, we have been thinking about it for a very long time. The pioneers experienced many frustrations in their development work. Its use by the Austrians has been perfected only recently, and the very rapid developments in both the L.D. and Kaldo processes have come in the last three years. I believe that the next ten years will see a complete revolution in the industry. Of course, I respect what the hon. Gentleman has said in his advocacy. He has been proved right in this case.
These new processes will give a higher quality steel for this country at a lower capital cost and a lower running cost, but tremendous expenditure will be needed to turn the industry over to this type of production. It is interesting to note that Colvilles and Richard Thomas & Baldwins at Newport have the L.D. process. Corby and Ebbw Vale and the Steel Company of Wales at the Abbey Works have Bessemer with oxygen blast. Oxygen lancing has been carried out to best effect at Brymbo.
It is exciting also that not only have the electric arc and Bessemer processes


been modernised and improved, but the steel producers have done what they never thought they could do, that is, use oxygen injection in the open hearth process, in this way reducing very much fuel costs in the industry. They have achieved one of the greatest successes in the industry yet by the injection of supersonic oxygen blast on to the surface of the liquid steel in the open hearth, which becomes so hot that it has to be covered with scrap lest the roof of the furnace should fall in.
Probably, the greatest opportunity yet faces the British steel industry, the opportunity to have steel of the highest quality at lower capital cost and lower running costs than ever before. It is very important that the people of this country should be encouraged to invest in the industry knowing that they will not have a quick return but knowing, as my hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) has said, that they are investing their own savings in the growth of a great British industry.
I do not wish to join the battle which has been fought in the House and the country continuously during the last fifteen years, principally because I feel it is almost impossible to say something new and it is tedious to weary the House with repetition. My own belief is that the State has many things to do by way of welfare, and when there is investment by the State in industry it must be on the welfare basis and on that alone.
The decision to make loans to Richard Thomas and Baldwins and to Colvilles was taken for a social purpose. Anyone who served in Parliament during the winter of 1958 will recall the local unemployment there was in the regions affected and the need to stabilise industry there. For that reason, Parliament passed the money. I think it right that we as a nation should come to the help of an individual, an industry or a region in the time of their need so that, when the need is passed, the individual, the industry or the region may again play their full part in the activities of the country. I do not think it right that the State should take ordinary shares or, if necessary, preference shares. Much has been said about speculation in ordinary shares. This is certainly not the function of the State.
The industry today, under private enterprise, will face a great challenge from private enterprise steel both in the United States and in Europe. Under excellent management, with co-operation with the workers, more and more of whom, I hope, will own shares in the companies in which they work and know that they have a stake in their own industry, we shall forge ahead. I have great confidence in this great industry.

6.30 p.m.

Mr. John Morris: I had some difficulty in understanding some parts of the speech of the Economic Secretary. He said that the people had rejected nationalisation. Obviously, he had not heard what was said by one of my hon. Friends concerning the election results in the steel constituencies, particularly in South Wales and Scotland, where this issue was important.
I found difficulty in understanding the questioning that went on about the functions of I.S.H.R.A. I should like to know whether I.S.H.R.A. comes to an independent judgment or whether it is influenced by the Government. If it is highly independent, as the Government try to make out, what is the point of the Government giving the assurance that I.S.H.R.A. will be able to complete in substance its activities in the life of this Parliament? The Government cannot have it both ways.
I congratulate the Government on announcing the sale of fixed-interest bearing stocks while the House was sitting. That is not entirely an innovation, but it is a pleasant change from past practice. When large firms have been sold, the practice was that it should be done while the House was not sitting. We are, therefore, grateful to the Government for these small mercies.
In the debate on the sale of S. G. Brown Ltd., last year, my hon. Friend the Member for Newton (Mr. Lee) complained that the announcement of the sale was made while the House was in recess. He said:
I think that we are entitled to believe that this was a deliberate attempt to prevent Parliament functioning at all, so that when we returned we would be faced with a fait accompli."—[OFFICIAL REPORT, 28th June, 1960; Vol. 625, c. 1150.]


That has been the practice in the past—send the House away so that the mice can play. The maxim seems to be that not only should justice not be done, but it should also not be seen not to be done.
I will not go into detail concerning the latest outrage. I have been anxious to debate the steel industry for quite a long time, and I was supported in this by the hon. Member for Kidderminster (Mr. Nabarro), who was also anxious to debate this recent sale. Unfortunately, he is not present today, otherwise I should have said something more. The more the pleasure of the hon. Member for Kidderminster with the latest success of the sale of these assets the more suspicious and anxious are we on this side. To borrow an Americanism, what is good for General Motors, or, in this case, what is good for the City, is not always good for the country as a whole.
In this instance, there were 47,600 applications for £136 million worth of stock. There was only £105 million worth of nominal stock to be shared among all these applicants. All these offers were substantially over-subscribed except those for the Steel Company of Wales. The Financial Times, in stating the obvious just after the announcement of the subscription, was able to say that, with the success of steel, the
spectre which had been haunting the funds market for a long time appeared to have been laid",
and the result is that everyone is happy with the price.
I do not propose to go into detail about the price and the way it was arrived at. It is obvious to anyone who has looked into the matter that the Government, by their own actions in the past year or so, have created the conditions for what is now tantamount to a bargain basement. Their own high interest policy has depressed the gilt edged market and, further, the anticipation of the mammoth unloading of steel stocks has depressed the market. Therefore, the price obtained for these stocks is the obvious result of the Government's action in the past few years.
We are entitled to ask whether it was necessary now to sell these stocks. If the Government are so confident that they will retain the support of the elector-

ate at the next General Election, and subsequent elections, why did they not spread the sale of these stocks over ten years or so? Then the market would not have become depressed by the anticipation of massive unloading of steel stocks.
I wish now to refer to the sale of Llanelly Steel. That has been discussed by several hon. Members. It concerns the sale of £3¼ million worth of stock for £1¾ million—a loss to the nation of £1½ million. The words of the City Editor of the Daily Telegraph in August, just after the announcement of this sale, were:
The deal is clearly attractive, for Duport are buying £3¼ million of capital for their £1¾ million outlay.
That will go down in the financial columns of our newspapers as one of the most masterly understatements of all time. This is a double-your-money game in the steel markets. It is fortunate for the Government that the House was not sitting when this announcement was made.
The negotiations were completed on 6th July, a few days after the debate on S. G. Brown Ltd. in the House, but the announcement of the sale was not made until 2nd August. The Economic Secretary was able to say that the sale was not completed until 2nd August and that it was at the request of Duport that no mention was made of it until the purchase was settled. It was said that it was the new owners who had requested secrecy on technical grounds and requested that the announcement should be deferred until after the end of their financial year on 31st July. This is a case of the buyers of Llanelly Steel dictating to the Government when the announcement should be made.
The Economic Secretary cannot have it both ways. It was convenient to publish on 2nd August the fact that this company had been sold. But if the sale had not been completed and if the bargaining was still continuing, why was there a need for the new owners to ask for a deferment of the announcement until after 31st July? Either there was or was not a sale before 31st July. If there was no sale, there was no need to defer the announcement. If there was a sale, and if it was all over bar the shouting,


we can see a reason for asking for deferment.
How can the Economic Secretary say that the sale was not completed until 2nd August? What went on during that Bank Holiday weekend? Parliament went into recess on 29th July. The Bank Holiday weekend was 30th-31st July. The announcement was made on 2nd August. What was going on during that sweltering August weekend? Were negotiations still continuing? Had the purchase been completed, apart from the signing of the necessary documents, before Parliament went into recess? That is what we are entitled to know.
The picture which the Government are trying to paint by the announcement of the Economic Secretary is that the sale was not completed until 2nd August. Are we to believe that during the whole of the Bank Holiday weekend Duport officials and Treasury officials were still working on this issue and that it was not until the dawn of 2nd August that agreement was finally reached and that an announcement could be made about the matter? The picture painted by the Government is not credible. The whole of this transaction was buttoned up on 6th July, well before Parliament went into recess, and nothing further was done after 29th July until 2nd August, when the announcement was made. It was a deliberate act on the part of the Government not to publish these details until after the House had gone into recess.
When the Civil Lord of the Admiralty was giving the reasons for advancing the sale of S. G. Brown Ltd., he said that it was done in the interests of the employees. I should like to know the real reasons for deferring the announcement of the sale of Llanelly Steel from early July till 2nd August. Was anything new done over the Bank Holiday weekend? That is why I congratulate the Government, in this instance, on announcing these latest sales while the House was sitting. There is some speculation as to whether the proper price was paid for Llanelly Steel. I am certain that that point will be dealt with in some detail before the end of the debate. Was it necessary to sell this company at this time? Admittedly, it had made losses in the last two years, but the last year for which figures are available shows that it had pruned its losses to

one-third. What were the trading figures of this firm during the last year for which figures are available? I know that they would be figures for only part of the year, but we should like to know whether the losses have been pruned further, and, if so, whether this point was taken into consideration in the price paid for the company. The Staveley Iron transaction followed the same pattern and was put through in September, when the House was in recess. This company, with a nominal value of £8 million, was sold for £6 million to Stewarts and Lloyds, at least £2 million going down the drain. Stewarts and Lloyds is a company which has figured prominently in some of the transactions in which the steel companies have been indulging over the last few years.
Before the General Election, the steel companies tried to sell the party opposite, like a detergent, to the British people and in so doing spent a vast amount of money. The total amount spent by the industrial allies of the Government was £1,400,000. The Iron and Steel Federation alone spent £287,000. Stewarts and Lloyds, the same company as was able to buy Staveley Iron for £6 million, spent £269,000.

Mr. H. Wilson: I gave some figures in my speech this afternoon. It ought to be made clear that that was the direct expenditure by Stewarts and Lloyds. It did not include any contribution made by that or any other steel company to the £½ million expenses of the Colin Hurry campaign and it does not include any of the secret donations paid to the fighting funds of the party opposite by these steel companies. Therefore, these are strictly minimum and known published figures.

Mr. Morris: I am grateful to my right hon. Friend. The figure which we have quoted came from the Nuffield report. Some of us in South Wales who were at the receiving end know that the actual expenditure was far higher.
Two important facts are the sale of those two companies at a considerable loss to the public and, secondly, that some of the steel companies gave great material assistance to the party opposite before the last election. We would like to know whether there is any connection between these two facts. If there is not,


we would have been grateful had the Government said so earlier when the House resumed after the Recess. They should have issued a White Paper to say that they had considered the matter, which was of great concern to the public, and that to allay any anxiety they could say that neither Stewarts and Lloyds nor any other company was deriving advantage from the fact that they had put down a great deal of money to ensure that the party opposite was returned to power.

Sir Peter Roberts: Is the hon. Member suggesting that it is improper to spend money on political propaganda? If so, may I ask whether any money is spent by the trade unions or the Co-operative movement on political propaganda?

Mr. Morris: The hon. Member is going into a much wider sphere than this debate would allow. In this case, money was paid by a firm for a specific purpose. Shortly afterwards, other firms derived, or purchased profitably from the Government. I am not suggesting that there is any direct connection. What I am asking is whether the Government considered this matter and why they did not indicate earlier to the House that they were sure that there was no connection between these two facts.
As one of the sponsors of a Motion, together with sixty of my hon. Friends, I should like to congratulate Richard Thomas and Baldwins, a great publicly-owned firm, on its achievements to date. Last year, its trading profits went up by 25 per cent. and this year, they are up by 45 per cent. This year, the net profit before taxation is over £11 million. In the words of the company's chairman, these are "fine figures". We on this side—and, I think, the House as a whole—should be proud of the way that Richard Thomas and Baldwins has been able to trade and to expand. We on this side believe that the commanding heights of the economy should be in the nation's hands. I for one accept the view of the Spectator that those parts of the steel industry which are in the nation's hands should remain there, otherwise it would be difficult for the Minister "effectively to exercise" his obligations under the 1953 Act.
Up to 1959, since coming into the nation's hands Richard Thomas and

Baldwins has made huge profits, over £70 million, in addition to the further profit this year. It is obvious to everyone that this great company has not suffered in any way by being in the hands of the nation. The onus is on the Government to prove that this industry or the nation would benefit in any way if it were sold back to the public. The Government have not done this in the past and I am sure that they will not be able to do so today.
The chairman of Richard Thomas and Baldwins has made a statement which caused great anxiety to myself and to several other hon. Members. In his annual speech, he quoted the great developments in progress at Newport and elsewhere and the normal full-time activity of the company and he said that, additionally,
much time and thought have had to be devoted to work, argument and discussion on possible schemes for devesting the company. … The strain on the management staff and workpeople at all levels has been great.
This great company is fighting one of the greatest battles in its history, doing its normal work and expanding at a fantastic rate, yet, at the same time, it has to be troubled by working out schemes for devesting.
Have the Government ordered the company to do this? Has it been given a timetable? Has it been told that at the same time as carrying out its expansion programmes, it must carry the additional strain of preparing plans for devesting? This company is efficient. It has been entrusted with great development. According to the standards of hon. Members opposite, it is profit-making. What is the real reason for attempting to denationalise this firm? Is it that the City is desirous of coveting this particularly profitable Naboth's vineyard? Is that the only reason for denationalising it?
The Economic Secretary has given an assurance, although I could not follow exactly what it was, about when Richard Thomas and Baldwins will be denationalised. Before the end of this debate, we should have a clear assurance from the Government that until Richard Thomas and Baldwins has completed its present expansion plans, as well as continuing on full production, no work or anxiety should be thrust upon the company to prepare plans for devesting and that it should not for doctrinaire


reasons become the plaything of the other side of the House.
There has been some short-time working in my constituency and elsewhere in South Wales as a result of the recession in the motor car industry. In the economic debate, the Government were asked—but we did not get the answer—how long this would last. We do not know what will happen. The cloud in the sky is a small one and we would like to be assured by the Government that it will remain a small one and will not grow to be a storm.
We are living in a time of large developments and great new capacity in the steel industry. I, for one, fear that unless that expansion is accompanied by a rise in industrial production, there is danger of our steel capacity becoming underemployed. That is one of the fears that we must face. The president of the British Iron and Steel Federation, whose speech, I understand, the hon. Member for Weston-super-Mare (Mr. Webster) read a few days ago, has expressed the anxiety of the Federation. He said that
The Government should explore new ways to break away from the frustrating pattern of recent years, in which official thinking has been dominated by short-term financial worries, and should seek to create an environment in which industry can unleash its full wealth-creating potential and can plan for growth in great assurance.
That is the claim of the president of the Iron and Steel Federation. Neither the industry nor the nation can afford the Nero-like complacency and masterly inactivity of this Government, who have no plan whatsoever for the economy.

6.50 p.m.

Sir Peter Roberts: I rise mainly to refer to four points mentioned by the hon. Member for Rotherham (Mr. Jack Jones). I felt that his first point was one which we should all clearly understand as the point of view of hon. Members on the Socialist benches. This was when he talked about raw materials belonging to the people. He enunciated the whole principle of State socialism which, from his point of view, goes for the whole of industry.
It is necessary that we should realise the way in which the Labour Party is thinking on this issue. A year or eighteen months ago we thought that

members of the Labour Party had discarded the idea of the nationalisation of the means of production, distribution and exchange, but we see again exactly what they have at the back of their minds. It is State socialism in all its forms, and it is interesting that today we should have seen this come out into the open.
In his second point the hon. Member for Rotherham seemed to criticise the steel industry for not being in a position, directly after the war, to forge ahead as quickly as industry would have liked it to have done.

Mr. Jack Jones: No.

Sir P. Roberts: The hon. Member was complaining that apparently there were not sufficient raw materials and sufficient steel after the war, but surely he must appreciate that during the war the steel industry did a magnificent job in producing the steel that we required. It does not become him or his party to criticise an industry or the people in it for not having sufficient steel when the war was over.

Mr. Jones: I took part in the production of that steel, though I want no credit for it, since the sons and daughters of those of us who were then in the steel industry are now doing a bigger job. What I said was that there was not enough capacity at that time to provide sufficient steel to meet the full-employment programme.

Sir. P. Roberts: That is what I thought the hon. Member said. The reason why it was not there was that manpower and capacity for production had been used in the previous four years to win the war.
The hon. Member says that nationalisation was popular in the steel-making areas. He mentioned various cities, but not Sheffield. I have raised this issue time and time again and I have never been challenged in the speeches I have made in Sheffield. It is only fair that the House should know that.

Mr. Jones: The hon. Member should go to Brightside.

Sir P. Roberts: The hon. Member's fourth point showed muddled thinking, because he said that if we go on as we are we shall meet competition which


may defeat our own industry. What is the competition that we shall meet? It is coming from Germany, America, Belgium and other countries and that is primarily private enterprise competition; unless the hon. Member suggests that it is Communist and Russian competition that we have to face.
I do not think for a moment that there is any fear of that competition in this country in the foreseeable future. The competition that we have to face is that of private enterprise in the steel industry, and our great fear on this side of the House is that if the party opposite gets into power, and the steel industry is renationalised, it will not be able to compete against the vigour of private enterprise from overseas.
This brings me to the great difference between us in this debate. It is a difference of policy and of politics. We on this side of the House really believe that the steel industry should not be nationalised or part-nationalised. The hon. Member for Aberavon (Mr. J. Morris) asked why one particular company should not be allowed to continue under nationalisation. It may be that one company can ride on the sea of private enterprise, but the main principle is that we believe that the whole essence of nationalisation in a production industry is wrong. We therefore ask why one company should ride on that sea of progress.

Mr. Michael Foot: Really. "Ride on the sea", indeed.

Sir P. Roberts: I cannot agree with the opinion expressed by one of my hon. Friends about the ownership of the debenture and preference shares. There is obviously an essence of ownership in them and the Government were perfectly right and logical in taking the step which they have now taken. If they had not done so they would not have been living up to the undertakings that we as a party gave in previous election pledges.
Then we come to the question whether, if we sell, we should sell at a profit or at a loss. It should be made clear that some of the shares have already been sold at a profit. We are now dealing with some debenture and preference shares which are being sold at a loss. The criterion must be the market price at the time the sale takes place. To say that one should retain these fixed-interest

charges until some profit arises is the political argument, from the other side of the House, of merely trying to keep these assets in public ownership; because it may be a long time before these fixed interest rates come back to par. It is very likely that it will not be until the redemption rates appear. To say, therefore, that we should retain them till that time, is tantamount to saying that we should not sell them at all.
Credit is due to the Government for their timing of these last operations. I congratulate them on the timing and on the courage they have shown in tackling this big financial issue. As to the price paid by investors, there has been a great deal of talk about swindles, but I believe that the price paid by those who are buying these investments is very generous. To a large extent, I think that people felt that this was an issue which should be taken up, and although they might not have felt that it was a very good financial return they felt it was something that should be done in the national interest. I should like to pay tribute to the many people in all walks of life who have taken up this issue, to a large extent from a sense of public duty. Nearly 75 per cent. of the issue was underwritten firm.
The steel industry today is a vigorous and expanding one, as we all agree. We are looking with confidence to the future. I am disappointed that criticism and political strife is creeping back again into the industry. No doubt that cannot be avoided, but it is a handicap to any industry to have political strife, whether right or wrong, hanging over its head. We should be able to forge ahead into the future without the difficulties of political controversy. Nevertheless, the steel industry as a whole is spending, in 1961, £150 million and by the end of the year its capacity will be about 27 million tons crude steel. In 1962, that capacity will increase, we hope, to 30.3 million tons, and by 1965 capital expenditure will have amounted to about £450 million.
This is the basis of the discussions that we are having today. Accepting the fact that we believe in private enterprise, and that the industry must extend and expand, there must be the right economic climate in which this money can be raised and this enormous sum of £450 million can be put into the industry. It is an act of faith on the part of this country, and


investors and people in the industry who give their money or their work in the belief that this expansion would continue. This is an act of faith also by the Government, in taking this action to try to clear up the financial background. But the industry still has work to do. We are saying to the industry, "Go ahead, spend the money, produce to capacity, produce the steel", and I believe that the great majority of the people are behind the Government in their policy.

7.1 p.m.

Mr. George Lawson: Both the hon. Member for Sheffield, Heeley (Sir P. Roberts) and the hon. Member for Weston-super-Mare (Mr. Webster) spoke at considerable length on this question of free enterprise and private enterprise in which they believe. They spoke of the faith that the steel industry is showing in itself, now and in the future, as a faith based upon free enterprise.
The hon. Member for Heeley did a little gibing at our attitude to nationalisation and he regretted that this political view was coming back again. He seemed to think that we all accepted that nationalisation had failed and that private enterprise had succeeded. I have made this point on a number of occasions in steel debates, as the Minister of Power and others will remember. I dislike repeating points, but it seems to me that it is a very important point that we and the country appreciate that the issue is not whether the steel industry should be run on a nationalised basis Or on a private enterprise basis. Steel is not run on a private enterprise basis. There is no intention in the steel industry, and I can detect no intention in the Government, of returning the steel industry to a position where it is on a private enterprise basis, when we mean by private enterprise the characteristics which private enterprise claims for itself.
Competition is supposed to be cardinal to private enterprise. It has the great virtue of private enterprise that separate units privately owned and controlled are able to compete with one another, and the best man wins. That is not the case in the steel industry. Prices are controlled by the Iron and Steel Board. I know that the prices will be subject to wrangling and pressures be-

hind the scenes, but those prices are controlled and the steel industry is not competing on prices in this country.
Moreover, as hon. Members know, the steel industry does not compete in the purchase of its raw material. The steel industry is buying its raw materials centrally. It largely owns the ships which bring the ore to this country, so it is buying its raw materials in a collective way and selling them at controlled prices. Means are still often utilised for finding out the disparities that may exist between the prices for different types of ore bought from different sources, so that no one of the steel companies suffers a disadvantage by having to pay more than another.
A similar position occurs with scrap. The hon. Member should know that the Government wished to introduce compeition in scrap prices. When the Government controlled the prices of scrap in this country for export they insisted that there should be a free market, but no sooner had the Government insisted on the statutory control of scrap prices being removed than the industry itself imposed its control on the prices of scrap. In iron-ore and scrap prices there is no competition. Nor, in many ways, can we say that there is competition in terms of development, because the plans of the various steel companies, which in some cases come from the companies and in other cases from outside the companies, that is to say, induced by the Iron and Steel Board, as witness the strip steel mill in Scotland, are submitted to the Federation, which is very careful to see that there is no investment development which would bring back the competition from which the industry suffered in the inter-war years.
The industry learned its lesson. It was on its hands and knees in the prewar years, and it was the Government which rescued the industry from competition. The industry is very concerned to see that this shall not return, and its plans for development are co-ordinated.
The hon. Member for Weston-Super-Mare seemed to believe that the industry functioned by competition. He ought to know more than that. It is, of course, often the case that we never learn those things which we do not want


to learn. To talk of the steel industry as an industry based on competition or private enterprise gives a meaning to the term "private enterprise" which I fail to understand.
I wish to put a point to the Minister of Power, for whose integrity and honesty I have great respect. This is not a political point. The prices of steel in this country are controlled. A few years ago there was a considerable gap between British steel prices and the prices of steel in most other Continental countries. As the right hon. Gentleman knows, this gap in prices was constantly used for, I will not say bragging, but as a means of claiming credit for the steel industry. But very little is said about it now. Until a year or two ago, the Iron and Steel Board in its Annual Report published a chart showing how great was the difference between British steel prices, on the one hand, and Continental and American steel prices on the other hand.
I am here dealing not with American but with Continental prices. The Board no longer publishes this chart. It is true that it publishes tables of figures which it is almost impossible for the layman to understand, which he cannot use to make genuine comparisons. It may be argued, of course, that the products of the steel industry are so diverse and of so many different types of steel that it is impossible to make an accurate estimate in order to compare our prices with Continental prices, but the point is that this comparison was made until two or three years ago and that if it has been abandoned it is for the very good reason that the comparison is no longer in our favour.
In the last debate I said that we were still claiming that our steel prices were a little below Continental prices although on the Continent they claimed that their prices for comparable steels were lower than ours. It was sufficient for my purpose then to draw attention to the fact that whereas formerly there was a huge gap between our prices and Continental prices, that gap had disappeared. I am not in a position to say whether our prices are slightly above or slightly below Continental prices, but it seeems clear that there is very little in it. I suggest that this is a very important point because British steel prices are controlled—a control which has the effect of a Statutory Instrument.
The steel industry in Britain is making huge profits. Hon. Members opposite and even my hon. Friends take pride in these huge profits. Why is it making huge profits? I suggest that it is because the steel industry is being enabled to charge prices substantially higher than is necessary—and these are controlled prices set by a Government agency. The steel industry cannot function other than under Government guidance, protection and control, but this control is operating in such a way that the gap between our prices and Continental prices has been closed and that huge profits are being made by the industry.
This is a serious, and not a party, point which the Government, who are responsible for the Iron and Steel Board, should consider, because if these prices are higher than they need be, then the rest of our industry is carrying a heavier burden than it ought to be carrying at present.

Mr. Jack Jones: My hon. Friend knows that prices are fixed in a way which allows the least efficient and the most decadent in the steel industry to make a profit. This enables the most modern and highly efficient to make large profits.

Mr. Lawson: I thank my hon. Friend for his intervention. I did not want to go into the calculations which are used in setting these prices. They are set through a Government agency, and I do not suggest that there is any wangling or dishonesty, but over the years they have been set in such a way as to abolish the gap between our prices and Continental prices and to result in huge profits being made. If those profits are larger than they ought to be, it means that the prices charged are higher than they ought to be, that the steel-consuming industry is carrying a heavier burden than it ought to carry and that its task of exporting is made very difficult.
Let me give some substance to what has been a general argument. Colvilles, which consists of a group of firms, is largely in my constituency. The great steel strip mill development at Ravenscraig is in Motherwell. When we consider finance, we are apt to talk in terms of high finance. Most people, who have no knowledge of high finance, cannot understand it. I am not a financier, but I wish to put an argument


which will appeal to the hon. Member for Weston-super-Mare, who is a stockbroker and the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). Perhaps the hon. Member for Walsall, South will object to what I say, but I will put it as simply as I can to him.
Colvilles was denationalised in January, 1955, and the 10 million ordinary £1 shares were sold for 26s. each. In other words, the ordinary capital of Colvilles brought to I.S.H.R.A. and eventually to the Treasury about £13 million at the beginning of 1955. The Treasury was not too hard on Colvilles on denationalisation and left in the firm the equivalent of £2 million. In other words, the value which was placed on Colvilles in 1955 by I.S.H.R.A. and the experts who judged these things was £13 million, plus £2 million still left in the firm in the form of capital. In other words, a valuation of £15 million was placed on Colvilles.
Since then Colvilles has raised in the market £6 million towards the second stage of the big Ravenscraig scheme. This makes £15 million Government valuation plus £6 million raised in the form of stock which gave a right to the stockholder to turn it into ordinary shares as he thought fit. From 1955 to the last annual statement, Colvilles had paid out in dividends £9,471,000. But that is only a small part of the story. It is true that this is subject to tax, but so are anybody's wages. We know what putting to reserve means; it means largely reinvestment in the industry and building up the capital equipment. I am blaming no one for putting money to reserve or saying that it is a bad thing. We must recognise, however, that this building up of the capacity of the industry over these years is reckoned by the firm at £27,333,000.
In other words, speaking roughly, there were £9½ million in dividends and over £27 million put to reserves—and that belongs to the ordinary shareholders. The shareholders are the people who bought £13 million worth of shares. If my calculation is correct, the total of dividends paid out and money put to reserve between 1955 and 1960 is £36,804,000, which we may call, for our purposes, £37 million. That is for an enterprise which cost the ordinary

shareholders £13 million, with an addition of £2 million left in the kitty, and at best £6 million raised subsequently, and that was raised for the second stage of the Ravenscraig scheme which is not yet earning anything at all.
Thus, people put this small sum of money into the firm to get this huge sum of money. This is the kind of thing which the ordinary man understands. I have not looked at today's quotations, but the ordinary shares of Colvilles which were sold in 1955 for 26s. each were quoted yesterday at 80s. 6d., which is a substantial rise, apart from all the dividends which have accrued over that period.
I suggest that this cannot but imply either that the people who valued Colvilles were hopelessly out in their valuation, and that in that sense the nation has been defrauded, or that Colvilles was reasonably well valued at the time but that the policy of enabling these high prices to be charged and huge profits to be made has led to the industry of the nation carrying an unnecessarily heavy burden and is detrimental to the nation. I do not blame the experts the I.S.H.R.A. for the valuation. That is the Minister's responsibility.
Hon. Members opposite speak in terms of profits as though they were a measure of success. They are not. One might as well suggest on that basis that making a huge profit by running a group of prostitutes is being successful, but it would not be taken as a measure of success of worth to the nation. We must look beyond that measure. The serious point is that either I.S.H.R.A. valued incorrectly or else the prices which have enabled these huge profits to be made have been much too high.
There is also the prior charges stock which has now been sold. The Economic Secretary suggested that this stock arose out of the process of revaluation under denationalisation. When Colvilles was denationalised and revalued prior to that, £2 million was left in the kitty, and there was also £14 million in terms of such stock. The Government paid cash amounting to £12 million. Thus the development which I have described was largely paid for out of public money. It seems that the Government will perhaps get back about three-quarters of their money.
The steel industry has been denationalised not in order to give it back to free enterprise—the Government dare not do that—but to make it more profitable, not in the sense of success for the nation but in the sense of lining the pockets of private persons. Partly because of the doctrines of the party opposite, partly because of the desire, as the financial editor of the Spectator said, to rub Socialist noses in the denationalisation process, and partly, perhaps, because of the Government's wish to reward faithful and generous supporters, the nation is suffering in a way in which it need not suffer. The Government have been and are engaged in a reprehensible process which, I hope, will be adequately understood by the people.

7.23 p.m.

Mr. John H. Osborn: I should declare my interest in the steel industry. Like the hon. Member for Rotherham (Mr. Jack Jones), I have been connected with it for a number of years, though not for the fifty years for which he has served in it. My association is with a steel company which was founded by my great grandfather. It was the interest of Members opposite in my industry, and their potential interest in small steel works in Sheffield, including my own company, which whetted my appetite for politics and, therefore, gave me the opportunity to speak in this debate; and may I say that I am in complete disagreement with the views of hon. Members opposite about nationalisation.
I want to dwell on some of the political aspects of the debate so far. I think I speak for the steel industry as a whole—certainly for many managements—in saying that we regret that the industry is still the subject of political controversy. As a member of the industry, I regret having to speak about it in the House in a political sense, and in saying that I think that I speak for the majority of honest, hard working craftsmen, such as the hon. Member for Rotherham, who wish, regardless of politics, that their livelihood was out of the storm of being dealt with from time to time in the House of Commons.
There is some embarrassment among hon. Members opposite about whether Clause 4 of the Labour Party's constitu-

tion should apply or not. I am certain that they would renationalise the industry, and that that would affect some 40,000 people in a city such as my own. We should realise that the threat is there until such time as Members opposite listen to some of their colleagues on the Continent, who do not regard nationalisation as a normal part of Socialism.
I congratulate Richard Thomas and Baldwins on having done a very good job, but we congratulate it as a nationalised firm working in competition with private industry at the present time. I have seen some records of the capital employed by this company compared with two other companies. The capital employed in the case of Richard Thomas and Baldwins gives a gross profit, after deduction of tax, of 12·8 per cent., as against 12·2 per cent. for the Steel Company of Wales and 14·5 per cent. for Summers. We can deduce from that that it is competing effectively with other steel companies in this country.
Last June, I listened to the debate which we had on the steel industry, particularly the sheet industry, and heard the hon. Member for Newton (Mr. Lee) refer to the shortage of capacity. Since then there has been short-time working, which many of us regret, due to other circumstances. Responsibility for the rate of expansion of the steel industry, or of one company, must rest with someone. That is the whole crux of the difference between us and Members opposite.
I believe that the final decision should rest with the boards of directors and managements, because no board of directors likes to see vast capacity unused. I have personally been in the position of facing the dangers of having unused capacity. That leads to losses, and I can assure Members opposite that a manager who has to face losses fully values the worth of operating profitably.
I therefore insist in my view that, as a necessity for good management, the decision must be left to individual boards which have complete authority for governing their companies. If the shareholders are dissatisfied then, at the annual meeting and otherwise, they have means of expressing their dissatisfaction. In the steel industry each individual firm operates in conjunction with the


Iron and Steel Federation and the Iron and Steel Board.
Recently, Mr. C. R. Wheeler, president of the Iron and Steel Federation, made some appropriate remarks. He said:
The arrangements for forward planning in the steel industry are often misunderstood. It is therefore worth repeating that the primary responsibility rests squarely on the individual companies, reacting as they see fit to their assessments of market trends and taking full financial responsibility for the success or failure of their judgments. It is the companies who are the prime movers in the development field.
That position, however, does not preclude other influences from coming to bear, of which two deserve special attention. Firstly. companies' plans are influenced by their joint review of the longer-term position, made through the Federation.
Then Mr. Wheeler referred to the influence of the Iron and Steel Board. That is the position in the industry, and it is very satisfactory. On the one hand, it meets a national need, the deployment of resources, and, on the other hand, it achieves an element of competition.
The hon. Member for Motherwell (Mr. Lawson) spoke of competition. Competition is not confined to price. It depends on selling, quality and inspection as well as price, and particularly on services and delivery. There are many factors in competition, but I will deal with prices later.
Many people in Sheffield and elsewhere have been sympathetic with the attitude taken by my hon. Friend the Member for Kidderminster (Mr. Nabarro), and I regret that he is not with us on this occasion, because he has often pressed for the denationalisation of the steel industry. I want to refer to the final sale of £85 million of debenture and fixed-interest stock. My hon. Friend the Member for Weston-super-Mare is a stockbroker and I have discussed this issue with stockbrokers who told me that the stock would probably be held by the underwriters and given to discount. There is a potential danger in that. I am not a stockbroker and I have nothing to do with deciding the price or the interest at which an issue shall be made, but it was feared in the case of the Steel Company of Wales the underwriters would hold the shares. That is a factor which should be appreciated.
Last June, the hon. Member for Newton asked:
Do the Government intend to follow the present pattern of selling equities while

I.S.H.R.A. holds large amounts of fixed-interest loans?"—[OFFICIAL REPORT, 27th June, 1960; Vol. 625, c. 969.]
That, in practice, is what is now happening. The total amount of money involved in the devesting operation has been £400 million, including a subscription of £150 million by I.S.H.R.A., of which only £72 million has yet to be devested, £29 million in equities, of which the Richard Thomas and Baldwins holding amounts to £21 million, and £42 million in debenture stock.
What has been the pattern of this devesting within I.S.H.R.A.? In 1951, public holdings were 96 per cent. and private holdings 4 per cent. The holdings are now 10 per cent. in the public and 90 per cent. in the private sector. As an observer, I suggest that the Agency is getting on with its task reasonably rapidly. Some of the sales have been private and some public. The latest firm to be taken over in my area is J. B. Habershon's, which was taken over by Firth Cleveland. The Park Gate Iron and Steel works, in Rotherham, was taken over by the Tube Investment group in 1956. In these sales, net revenue after tax and costs has been £24½ million over the period, and there has been an appreciation on disposal of the assets of £12 million. Those figures appear in the Report of I.S.H.R.A.
My hon. Friend the Member for Weston-super-Mare outlined the capacity and growth of the steel industry. That is something of which we should be proud. Demand for 1965 is estimated at 30 million tons and capacity is likely to be 34 million tons and it is aimed to export 5 million tons. My contacts with the steel industry of Europe have shown that, technically, and in many other ways, through the Iron and Steel Federation and the British Iron and Steel Research Association, our steel industry is keeping in close touch with European firms, and vice versa, on technical matters.
When considering the problem of raw materials we should not neglect the fact that we are now extracting our own ores to a much greater extent. However much the increase in demand, a substantial contribution can be made from our own natural resources and last year production increased by 2 million tons to 17 million tons.
One of the problems of the steel industry is that it relies on other industries, especially nationalised industries, for its fuel. In the Guardian, on 15th February, there was an article by Mr. Tugendhat dealing with prices of fuels to the steel industry. This country is at a severe disadvantage compared with its European competitors. One of the suggested figures is a 20 per cent. disadvantage. The steel industry is seriously concerned with increases in coal prices which result in increases in electricity and gas costs and, for that matter, transport costs.

Mr. H. Wilson: The hon. Member will be aware that the last increase in coal prices—I am sure that the Minister of Power will confirm this—was more than explained by the increased cost of stocking on the ground which, however much we may disagree about the policy, has resulted from the Government's fuel policy and the high rate of interest which the Coal Board has had to pay to maintain that stocking.

Mr. Osborn: No doubt the Minister will deal with the question of high interest rates, which is vital, but which does not arise in this context. The steel industry has to increase its prices by between 25s. and 35s. a ton for every £1 a ton increase in the price of coal. There are compensating factors to be set against the increased cost of fuel. The industry is improving its efficiency and the figure of 16·8 cwt. of coal in the blast furnace has been reduced to 16·5 cwt.
On a recent visit to Europe, I made exhaustive inquiries about how our prices related to those of other countries. The statement in the annual Report of the Iron and Steel Federation says that British home trade prices for iron and steel generally remain below American prices and fully competitive with Continental prices. We are given various examples. For instance, billet prices in the United Kingdom are about £32 a ton compared with nearly £39 in the United States of America and £37 in Germany.
For my own interest I have also studied how prices are arranged in Europe. They are not fixed prices. Prices are recorded in Luxembourg and there is a variable feature in Europe, a practice of which our industry is

aware. Our prices depend on profit margins. If the steel industry does not get satisfactory profit margins, it does not have the surplus to reinvest its own capital investment. As our need to export increases we must bear in mind the need to be competitive with Europe.

Mr. Jack Jones: We have listened with great care to the argument that prices prove the efficiency of the industry. Is not the hon. Member telling the House that, despite the stories of what would happen under nationalisation, after a period of nationalisation the prices, and therefore the efficiency, were as good as, or better than, ever?

Mr. Osborn: Yes, at present the steel industry is highly competitive compared with European prices, but if prices had to go up the picture might be different, and I have given reasons why they might go down.

Mr. Lawson: The hon. Member is making my point. A short time ago our prices were very much better than Continental prices. The best that the Iron and Steel Board can say now is that our prices are competitive with them.

Mr. Osborn: There are other factors which may come into the question. I could go on to deal with capital investment, which has already been referred to. My hon. Friend the Member for Sheffield, Heeley (Sir P. Roberts) mentioned that we had spent £140 million this year and would spend £200 million next year in the industry, of which a considerable amount would be devoted to the new processes mentioned by my hon. Friend the Member for Weston-super-Mare—the Waldo process and the Ajax process, for example.
We have a prosperous industry, of which we are proud. We have carried out research, and have continued to expand. New processes are being developed, including methods of forming and pressing, and there are new techniques of extrusion. From what I have seen of the industry in this country and abroad, I can say that we have nothing to be ashamed of, despite what we hear about developments in Europe.
I have merely mentioned bulk steel. Sheffield is renowned for its special steels, including stainless steels. My right hon. Friend the Minister of State visited


the stainless steel exhibition in London only last week. The export potential of these steels is tremendous, and at the moment Sheffield has full order books. I re-emphasise that the industry is a strong one. It would like to be freed from politics and from the fear of being renationalised if there were a political change. I therefore urge my right hon. Friend to complete denationalisation as quickly as possible. That would give great pleasure to my hon. Friend the Member for Kidderminster and also to those in the industry.

7.43 p.m.

Mr. Michael Foot: The hon. Member for Sheffield, Hallam (Mr. J. H. Osborn) began and closed his speech with an appeal that the industry should not be affected by politics. I know that it is a familiar claim by people speaking from platforms—on both sides of the House, but chiefly on the other side—that political discussion has somehow interfered with the expansion of the industry. That is not so. The industry has expanded more quickly when there has been controversy about steel than at any other time.
I do not think that any spokesman for the steel industry—and there are a few sitting opposite—would be very proud of what happened in the industry before the war. It was certainly not serving the nation very well in the 1920s and 1930s. Starting just before the war, however, especially in Ebbw Vale—thanks to the work, not of the industry generally, but of Sir William Firth in particular—and continuing after the war, the industry expanded much more swiftly. This expansion continued while the industry was in private hands under the Labour Government. The threat of nationalisation then did it a lot of good.
Expansion continued in the period when the party opposite was devesting some sections of the industry, when the fact that it might be renationalised did it a lot of good, and it went ahead with a big expansion programme. Nobody should be deceived by the familiar argument, which may sound credible on the face of it, that political controversy about the industry injures it.

Mr. J. H. Osborn: The steel industry is expanding throughout the world

Production has gone up by 350 million tons. It is going up in Europe.

Mr. Foot: I am not saying that political controversy is the sole cause of the expansion of the industry, but I am denying the argument put by the hon. Member that it gravely interferes with the industry. All the facts seem to prove that it does the opposite.
It is also significant that among all the Members opposite who have spoken, many of whom have re-emphasised their opposition to steel nationalisation, not one has dared to criticise the record of the steel industry as a whole when it was in public ownership, and the record of Richard Thomas and Baldwins in particular. As for the references made by the hon. Member to the price of coal and the imposition it has been to the steel industry, I do not think that the steel industry would be wise to have an inquiry covering the past ten years, making known the prices it has had to pay for coal compared with the prices paid by its Continental competitors. I do not think that the industry would find such an investigation very gratifying to them, or a matter for pride on their part. Indeed, if they carried out such an inquiry it would be discovered that the coal industry—comparing prices here with those in Europe—has been subsidising the steel industry. The hon. Member should not press that part of his argument too far.
All those hon. Members opposite who have spoken so far—especially the Economic Secretary—and the Minister of Power who will reply, should take notice of the remarkable speech made by the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid). He spoke as a financial expert, and he had nothing good to say about the main transaction, which involved a loss of £20 million. It was £20 million down the drain, and not a word in defence of it came from the hon. Member. He said that it was an unnecessary and irrelevant operation. I should think that £20 million would be a lot to lose in carrying through an irrelevant and unnecessary operation.
The hon. Member also said that a more satisfactory price could have been secured. At the beginning of the debate the Economic Secretary said that the price was fair and reasonable, but that is not what his financial adviser and expert said.


The hon. Member said that a more satisfactory price could have been secured. Indeed, the Stock Exchange prices quoted by the hon. Member prove that the estimate of the price asked was not that which the City made up its mind would be a reasonable one to pay.

Sir H. d'Avigdor-Goldsmid: My point was that if the operation had been carried out more quickly the price realised would have been more satisfactory.

Mr. Foot: That is quite true. The hon. Member said that the operation was clumsy and badly carried out, but he also said that it was unnecessary and irrelevant. If that operation cost us £20 million, it is quite an indictment of Government policy to say that it need not have been undertaken. The hon. Member, who obviously speaks as an expert in these matters, has accused the Government of political masochism. I should have thought it was more like fiscal sadism. It is not the Government who are having to pay; it is everybody else. We are all having to pay £20 million for an operation which, according to the chief financial expert on the Tory benches, was not necessary at all. Neither the Economic Secretary nor the Minister is likely to go back over the argument whether there was a £20 million loss. It was admitted. The Economic Secretary said that there had been a profit on a previous amalgamation, and that if we took the two operations together we could say that there had been no loss. But if we had stopped after carrying out the first operation, and had not carried through the one which the hon. Member for Walsall described as unnecessary, we would not have lost £20 million.
Therefore, it is £20 million down the drain; £20 million which would have been in the keeping of the Government and in the possession of the taxpayers if this operation had not been put through. I think that it would have been much better if the Economic Secretary had not, at the beginning of his speech, sought to hide behind the Agency at all, but had come out straightforwardly and said, as he admitted at the end of his speech, that this was in fact an operation which the Government were putting through because it was an important contribution to their policy of denationalisation. I think that a perfectly true claim. That is the only thing which can be said for

it, that it is a contribution to the policy of denationalisation, although the hon. Member for Walsall, South disputes even that.
It is a very expensive piece of doctrinaire activity to put through an action which serves no benefit whatever, but which is solely an important contribution to the policy of nationalisation. It does not achieve anything for the country; it just loses £20 million. In view of what were the subscriptions to the Conservative Party funds in one way or another during the election, if the Government lose £20 million of the taxpayers' money at the behest and because of pressure from some of the Minister's hon. Friends, I do not think that it is going too far to call it corrupt. I think that it is corrupt that the Government should have such scanty regard for the protection of public money that they should dish it out in this way, very largely to firms which contributed a great deal to getting this Government back to the Treasury Bench. I think that it is a corrupt practice. I do not think there has been any attempt by the Government—

Sir P. Roberts: The people who got anything out of this are not the steel companies but the investors in the City of London.

Mr. Foot: I do not think that those companies have done so badly out of it. I am sure that Stewarts and Lloyds have made something out of it. I do not think the hon. Member will find that the steel companies have not made anything out of it. I think that a bizarre view for the hon. Gentleman to express and it does not stand up—

Sir P. Roberts: It certainly does.

Sir H. d'Avigdor-Goldsmid: The hon. Gentleman is being perverse. He must realise that a company is not allowed to purchase its own shares.

Mr. Foot: If the hon. Member looks at what happened over Staveleys, for instance, he will find that what I have said is not an exaggeration. The hon. Gentleman referred to these matters in rather a blithe fashion. He talked about Richard Thomas and Baldwins being "in the kitty" still. I do not think that an elegant phrase to use about a great steel


company which the Government are proposing to sell off, if they can, in the same style as they have sold off some other firms, and I think that the hon. Gentleman should use more elegant language about the matter.
The Minister said that they were going ahead with the project of selling off Richard Thomas and Baldwins when the scheme going through at Llanwern now is nearer maturity. At that time they will put through the operation of selling off Richard Thomas and Baldwins. Well, no one has attempted, either in this debate or at any other time, to deny the success of Richard Thomas and Baldwins. By any test which may be taken, everyone is agreed that it has been a great success.
I should like to quote a statement made in the Financial Times of 13th January this year. It has another interesting aspect to which I will draw attention in a moment. When the accounts of Richard Thomas and Baldwins were published, the Financial Times said:
With denationalisation nowhere in sight the results from Richard Thomas and Baldwins can be for the time being of only academic interest.
That, by the way, is a very interesting comment on the City's view of the practices of one of the greatest if not the greatest steel firm in the country. It is only of academic interest to the City and to the Financial Times if there is no loot to be got out of it. This is how the statement goes on:
They are however extremely good,"—
that is, the figures of Richard Thomas and Baldwins—
and only Stewarts and Lloyds among the major steel companies has exceeded the 45 per cent. increase recorded in trading profits. By the end of the previous year most of the more difficult additions and modernisations at Ebbw Vale had been carried out, so that R.T.B. has obviously been able to enjoy a full year of peak demand for its major products, sheet, plate and tinplate, unhindered by the kind of development troubles that made the John Summers results relatively so disappointing.
That is a tribute from a quarter which obviously does not like public ownership, and no one has disputed the fact that this is a highly successful firm on any test one cares to make.
Moreover, much more than that can be said. Everyone knows that the whole

of the major development going ahead at Llanwern had to be undertaken by Richard Thomas and Baldwins when many other influences in the industry were trying to prevent it from going ahead at all. Many of the same kind of influences which prevented the expansion of the steel industry in this country before the war were brought to bear after the war to prevent Richard Thomas and Baldwins going ahead with this great expansion scheme. It showed a great spirit of adventure to do so, a greater spirit of adventure and expansion than was being shown in any other section of the industry. Now everyone agrees that this was necessary and will prove a tremendous asset to the nation. I should have thought that hon. Members opposite, who are passionate believers in private enterprise, would at least agree that if we are to take a great firm like this, which has been so successful on every count, and denationalise it, we should explain to the public why that is being done.
During the by-election which I fought in Ebbw Vale I asked the Minister of Power to come to Ebbw Vale and explain to the people there why he wanted the industry denationalised. I do not know whether the right hon. Gentleman got the message, but we sent it. We asked for any member of the Government to explain to the people of Ebbw Vale why this was to be carried through. Of course, they did not do so. Time and again the question has been asked in this House: it was put by my hon. Friends in the debate which took place in the middle of last year. They asked for an explanation why the process of denationalisation was to be applied to this great firm.
On every occasion we get the same parrot-like answer from the Economic Secretary or the Chancellor of the Exchequer, and I dare say that we shall get the same reply from the Minister of Power tonight. They say that the country voted for it and, therefore, as the people voted for denationalisation, the Government will sweep the board. In fact, of course, not only is it the case that in most steel constituencies, and certainly those in Wales, people voted against denationalisation—I suppose hon. Members opposite do not care about the views of the workers in the industry; apparently


that is not a matter of consequence to them—but the whole case put to the public about steel at the last General Election was based on fraudulent figures.
Yesterday I went to the Library and read the campaign guide of the Conservative Party. The Conservative Party lumped together all the figures of steel production from 1951–52 onwards and compared them with, say, 1958 and 1959. They did not trouble to distinguish between the sections of the industry which were privately-owned and those which were publicly-owned.
Consider the advertisements which the party opposite were so happy to have placed in the newspapers by the steel companies and by the Steel Federation. Time and again those advertisements contained figures of steel exports, and figures for steel expansion, and what had happened in different sections of the industry. But they never distinguished between the publicly-owned and the privately-owned sections. All these advertisements were fraudulent. They were telling the people a lie, saying that this was the great achievement of private enterprise, when included in the figures were not only Richard Thomas and Baldwins but some other parts of the industry which were still publicly owned. So that claim, too, is not valid.
Surely, we have a right to have a much fuller explanation from the Minister why the Government are to compel this great firm to divest itself of State ownership and become denationalised. Surely, if, as they say, the case is so strong that they converted the nation, why cannot they come down to Ebbw Vale to tell us what it is? If it is so powerful that the nation was swept off its feet by its logic and certainty, cannot they come and tell us? Will the Minister explain tonight why this great industry is to be handed back to private hands?

Mr. Morris: Let them come to Aberavon.

Mr. Foot: Yes, let them come to Aberavon and tell them. I think that the Minister should go to Ebbw Vale and some other places and hold a public meeting. Let the people who work in the industry hear what is this powerful case for restoring this industry to private hands. No—the truth of the matter is

that the Government are in a very considerable dilemma on the future of Richard Thomas and Baldwins, because if the industry stays nationalised and continues to be so successful as to show up many other steel firms, in fact, it will be a standing proof of the success of nationalisation. That is one side of the dilemma.

Mr. Jack Jones: It is already doing that.

Mr. Foot: Yes, that is what they want to stop.
On the other hand, they are in difficulty if they try to put Richard Thomas and Baldwins on the market, because it will create such a big stink that even this Government are put off by it, because they will not be able to get the money with which to have the firm bought, unless they almost give it away.
Therefore, I hope that the Government will reconsider the whole question of the denationalisation of Richard Thomas and Baldwins. It is an insult to the workers of the industry that they should push this through without giving any coherent explanation why they want to do it. It is an insult to the management, which has been so successful, that it does not get any coherent account of what the Government want to do, and why they want to do it. The fundamental reason why the Government want to do it is that they know, as I hope we on this side know, that steel is one of the central issues in our politics, and is bound to remain so for years to come.
I remember very well many of the debates we had in this House when the Labour Government were first nationalising the steel industry. They were fuller debates than the one we are having today, though, today, no doubt, hon. Gentlemen opposite think that they and their friends in the steel industry have done well enough. They have certainly got a great deal of loot out of it. They say it is better to let things sleep now, and they go round pretending that this is always in the interests of the nation; they do not want the great matter of the steel industry debated in this country.
This debate is certain to go on, because I hope that one of the very first measures to be introduced by a new


Labour Government, when we get one, will be to ensure that this great industry, on which the whole planning of the nation's affairs depends, is brought back into public hands and put into public ownership, so that all the benefits and the profits should go into the public coffers, instead of into the private pockets of the friends of hon. and right hon. Gentlemen opposite.

8.4 p.m.

Mr. John Farr: I am very glad to see that the hon. Member for Rotherham (Mr. Jack Jones) has returned to the Chamber, because I was present when he made his very interesting speech. I listened very carefully to what he had to say, but it seemed to me the whole time he was speaking that I could not help being reminded of the old Socialist marching doggerel:
Share up, and when my share is spent, Share up again.
He referred to the period long before I arrived in this House—about ten or fifteen years ago—when my right hon. Friend the Member for Woodford (Sir W. Churchill) was speaking, and the hon. Gentleman got up—

Mr. Jack Jones: The hon. Gentleman has charged me with using words that I did not use at all. I never said "Share up." What I suggested was that the God-given ore should be used for the benefit of the people to whom He gave it.

Mr. Farr: I am obliged to the hon. Gentleman, but I suggest that he should look in HANSARD tomorrow to see what he did say. You did say in your speech today that some years ago you were—

Mr. Deputy-Speaker (Major Sir William Anstruther-Gray): Order. I hope the hon. Member will remember that he is addressing the Chair.

Mr. Farr: I am sorry, Mr. Deputy-Speaker. I was saying that the hon. Member for Rotherham did say that some years ago he remembered speaking in a debate on iron and steel when my right hon. Friend the Member for Woodford took part. I should like to say to him, as a fairly new Member, who came into the House only at the last election, that things have changed a bit since then in this country. There is

quite a fresh idea going about, and it is that the sooner nationalisation of steel is finished for good and all, the better.
My real purpose in rising tonight is to make three particular points. The first is that the sooner the remaining holdings held by I.S.H.R.A. are disposed of, the better. Secondly, the sooner the remainder of the iron and steel industry which is still in the hands of the State is returned to its rightful owners—the private and public investors—the better. Finally, the sooner that I.S.H.R.A. is wound up, the better, too.
My reasons for these three statements are, very briefly, a summary of the attitude which has been impressed upon me in my own constituency and in other parts of the country. After all, we on this side of the House made one of our main planks in our platform at each General Election on the past four occasions that we would denationalise steel. We said it in 1950, in 1951, in 1955 and in 1959, and on each occasion the nation gave a larger and larger proportion of its support, by many thousands of votes each time, to the Conservatives.

Mr. Morris: Not in the steel constituencies.

Mr. Farr: I did so myself in 1955 and 1959, and now, when I return to my constituency, I am asked by many people, "What are the Government doing about it? Why have they not denationalised the steel industry and wound up I.S.H.R.A. years ago?" I must pass on those same questions to my hon. Friend the Economic Secretary to the Treasury, and ask him why it has not been wound up long ago.
The party opposite, from 1945 to 1951, went a very long way to fulfilling Clause 4 of its constitution which commits it to public ownership—let us call it properly and say State control—of the means of production, distribution and exchange, and, in doing so, apart from setting an example which was followed by many countries abroad, also created in this country some of the biggest monopolistic and unprofitable enterprises that this world has ever known. It nationalised no fewer than seven of our basic industries in six years, plus the Bank of England and the Raw Cotton Buying Exchange, in Manchester, and of all those seven industries, only one—the Raw Cotton Buying Exchange


—has been fully returned to private hands.

Mr. Morris: Does the hon. Member advocate that the remaining industries such as coal and the railways should be returned to private enterprise?

Mr. Ernest Thornton: rose—

Mr. Farr: May I deal with one intervention at a time?
I am obliged to the hon. Member for Aberavon (Mr. Morris). I was coming to that point. I do not suppose that we could find anyone who would want to take the railways or the mines back into private enterprise.

Mr. Thornton: Do I understand the hon. Member to suggest that the return to private enterprise of the Raw Cotton Buying Exchange has been a success? If he thinks so, I advise him to visit Lancashire and to seek the advice of the spinners.

Mr. Farr: I should be happy to accept that invitation at any time. Of the seven basic industries, the Bank and the Raw Cotton Buying Exchange which were nationalised, the Raw Cotton Buying Exchange is the only one which has been returned to private enterprise. The Bank of England is still nationalised and the seven basic industries, which the party opposite in the heyday of its power nationalised, are still publicly owned. No one has been freed from State control.
I want to know whether it is the intention of the Government to leave a sort of pilot scheme in each industry which is State-owned. For the life of me I cannot understand why, having promised that we would denationalise road transport, we never made a complete job of it, and have left 5,000 or 7,000 road haulage vehicles still running under the British Road Services flag.

Mr. Lawson: The agricultural industry has not been nationalised, but it is paid a subsidy of £260 million each year. Does the hon. Member think that is sound?

Mr. Farr: I think that is extremely sound inasmuch as of that £260 million subsidy paid to the farmer the British

housewife benefits by more than £100 million annually.

Mr. Morris: Would the hon. Member be willing to withdraw the whole subsidy and allow a free market for prices of agricultural products?

Mr. Farr: No, I would not. I do not think that that would be fair to agricultural workers or the industry generally, bearing in mind the highly subsidised low-priced foreign food which would come in as a result.
To continue with what I was saying, as I see it, it has been the intention of the Government to leave a sort of pilot scheme in these industries, not only in British Road Services. We have this uncertainty about whether we should complete the denationalisation of the iron and steel industry and there are one or two other examples. I shall not go into the details of them now, but there is a certain amount of hesitancy. The idea may be a good one, but I do not think it is a good one, to leave a certain part of each basic industry State-owned. I am thinking now of the Carlisle brewery scheme. Many of us on this side of the House would like to see that go, but that is a different kettle of fish.
I should like to see I.S.H.R.A. wound up as soon as possible. I should like the ordinary steel shares held by I.S.H.R.A. to be realised and sold off at fair prices to both private and public investors in Britain so that they may own a bit of Britain directly. On the public side, or the semi-public side, of course, I regard the Church Commissioners, the Benevolent Fund of the National Union of Mineworkers and the Co-operative Insurance Fund as three of the biggest shareholders in free steel. I ask my hon. Friend the Economic Secretary to remember what Milton said:
Hence, with denial vain, and coy excuse
and to proceed accordingly.

8.14 p.m.

Mr. Frederick Lee: The dismal record of this Government in many domestic fields covers such subjects as health, rents, land values and industrial production, in each of which there is a very sorry story to be told. I should have thought that any impartial observer of this scene, listening


to the arguments today, would agree that even in those subjects one cannot find any worse than the sorry story of the haggling we have had from this Government over the steel industry.
It has been said that no matter how often we debate questions of steel and why it should be denationalised we never receive any other reason than that hon. Members opposite won three elections with it in their programme. The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid), in a quite remarkable speech, pointed out that the question of the sale of debentures which we are discussing had nothing whatever to do with denationalisation of the steel industry. It is remarkable that we should find that the only pretext which we have had from the Economic Secretary today is that they have won elections on denationalising steel and that that is immediately countered by an hon. Member on his own side pointing out that this has nothing whatever to do with the denationalising of the steel industry.
There are reasons which can be given why this action is being taken. The hon. Member for Walsall, South pointed out that in a steel debate in this House a year or so ago the Minister of Power had a rough time. He did not point out that the rough time came from hon. Members behind the Minister. A great number of hon. Members opposite, the hon. Member for Kidderminster (Mr. Nabarro) in particular, were quoting that in the year 1960, seven years after the Tories' denationalisation Measure, more public money was left in the denationalised steel industry than when the Tories began denationalising. That was utterly and completely true.
In our own humble way, we on this side of the House tried to put the same point. The hon. Member for Harborough (Mr. Farr) has reinforced the same argument. Tory Governments have been in power for nine years and have pledged, election after election, to denationalise steel, but the tendency has been in the other direction. There is more and more public money in the industry and, of course, it is a grotesque situation. Now we are being asked to accept the sale of these debentures, not because that

makes sense—the hon. Member for Walsall, South talked about it as a self-inflicted wound, as of course it is—but in order that the Tories may say that they are now getting rid of parts of the steel industry still in public hands.
Let us argue either way, for public ownership or private enterprise in the steel industry, but let us argue it in the sense of whether it is an advantage to the country that the industry should be in public or private ownership. We should not try to argue it merely in order that the Tories can say that there is not now as much public money in the industry as there was before they got rid of the debentures. Hon. Members opposite, in their usual impartial way, have suggested that when we nationalise an industry that introduces politics, but that when they denationalise an industry that takes it out of politics. That seems a beautiful approach to the problem. The Government are not defending the position or saying that the sale of the debentures would improve the position of the industry by one iota. The hon. Member for Sheffield, Heeley (Sir P. Roberts), who is interested in the steel industry, would not say that this sale, especially of the debentures, will make any difference to the efficiency of the industry or that the ownership of debentures by the State has the effect of holding back production. Such arguments would be perfectly futile.
It is part of the squalid operation which the Tories have been conducting in trying to secure the denationalisation of an industry which has been an outstanding success, as my hon. Friend the Member for Rotherham (Mr. Jack Jones) pointed out, both from the point of view of the men who work in it and from the angle of the more progressive managements operating in it. It is a completely anti-social act and a waste of the time of the House to engage in this kind of Stock Exchange gamble, which does not affect the fortunes of a great nationalised industry in the way of improving production or anything like that.
My hon. Friend the Member for Aberavon (Mr. Morris) pointed out that there is one vital difference between this operation and the sale of the Staveley Iron and Chemical Co. Ltd. and the Llanelly Steel Company (1907), Ltd.,


namely, that by some fortunate coincidence the announcement has been made while the House of Commons is sitting. We are told that variety is the spice of life. In the case of Staveley and Llanelly—and in the case of S. G. Brown Ltd., which is not in the steel industry but is in the engineering industry—it almost looked as though the Government waited for the House to go into recess and then deliberately made the announcement.
My right hon. Friend the Member for Huyton (Mr. H. Wilson) gave us the facts and figures about the sale of Staveley and Llanelly and the financial effects of the sale of these debentures. I do not propose to repeat the figures. It is the same pattern all over again. Llanelly was sold at a public loss. Staveley was sold at an even greater public loss. The debentures are now to be sold to the public at a loss of £20 million.
The Tories claim that they put into their election programmes the fact that they would denationalise the steel industry. They are entitled to say that they got a majority in the country on that, except in 1951, when we got a majority of votes but not a majority of seats. However, the Tories did not say in their propaganda that they would denationalise the steel industry irrespective of the amount of money it cost the public and even if it meant colossal losses to the public purse.
I challenge any hon. Member opposite to say now that in his election manifesto or in his speeches in any of the elections which the Tories won he said that the Tories would go ahead with the denationalisation of steel even if it meant the loss of colossal sums to the public. I challenge any hon. Member opposite to deny now that the only way the Tories are managing to get rid of the steel industry is at a great loss to the public purse.
In the case of Staveley and Llanelly the loss was about £4 million to the public. My right hon. Friend asked if the Government had looked at the effect on monopoly that the sale of Staveley to Stewarts and Lloyds, Limited, would have. The transaction gives Stewarts and Lloyds, Limited, practically a monopoly in iron pipes, and so on. The Economic Secretary replied that the Iron and Steel Board decides the prices. This

is a new doctrine. Does it mean that if a monopoly is established in an industry in which there is a central price-fixing arrangement the Monopolies Commission cannot function? If so, this difficulty should be hammered out.
I do not say this because I am trying to denigrate the work of the Iron and Steel Board, but the great success of Richard Thomas and Baldwins in profits and every other aspect rather suggests that in some respects steel prices are too high. The profits being returned by the Steel Company of Wales, Limited, and others seem to indicate that prices in the steel industry could be reduced.
I have never understood why the party which always parades the Union Jack and bases itself on patriotism by the bucketful will agree that foreign enterprise can take over British industry but will not allow the British public to continue to own it. S. G. Brown, Limited, was a very successful small instrument-making firm, producing goods of the most terrific value. It did not matter to the Tories that the firm was a great success, that there was a strong team spirit in the firm and that its British workmen were competing successfully with all other instrument-making firms in the world. It was sold. The attitude of the Tories was, "Get rid of the principle of public ownership, even if 49 per cent. of this firm goes to American private enterprise". How the Tories can in one breath argue about patriotism and behave in that nonsensical fashion is more than we on this side of the House can understand.
It is admitted to everyone except the Economic Secretary that the sale of these debentures will mean a loss of £20 million to the public. One remarkable thing was that some weeks ago all the great newspapers contained four-page advertisements advertising the conditions of sale. I took the trouble to table a Question asking how much it cost. The answer was that it cost us £53,000 in advertisements, the biggest single part of which went to the Daily Telegraph, which, of course, has no connection with Toryism in this country. The sum of £53,000 was spent to advertise the sale of assets which will result in the loss of £20 million to the public. This is another case of this Government of businessmen doing their best for the British nation.
The Economic Secretary told us that we were putting the clock back and trying to create a nationalised industry again. We are quite prepared to stand on the record of the steel industry when it was in public hands. We have made it utterly clear that, because of the great success of the publicly-owned steel industry, when we are returned to power we shall renationalise it. As I said last June, the one great firm left in this sector, namely, Richard Thomas and Baldwins, had then contributed over £70 million profit to the public purse. My hon. Friend the Member for Ebbw Vale (Mr. M. Foot) pointed out this evening that in 1960 it increased that sum by another £11 million or £12 million, making a total of £82 million contributed to the public purse. We are proud to declare that when we go to the country again we shall be advocating the public ownership of the British steel industry. It is part of our programme, and we would certainly carry it out.
My right hon. Friend quoted Section 18 (1) of the 1953 Act, which gives. the Treasury the power to put off the point at which assets are sold until one can be sure that they can be sold at an adequate price. That is the purpose of the operation. The Economic Secretary today has quoted again the words of the Chancellor of the Exchequer who said that the operation of denationalising steel will be
… substantially completed during this Parliament."—[OFFICIAL REPORT, 21st February, 1961; Vol. 635, c. 283.]
As we have seen in the past, that means that it will be done even if it means selling at a price that is not adequate. In other words, what we are being told by the Chancellor is that whether we sell it in defiance of the conditions of the 1953 Act or not, we shall certainly sell it in the lifetime of this Parliament.
Will the Minister of Power tell me how the Government know that the conditions under which they can ensure an adequate return will be present in the lifetime of this present Parliament? How do they know? Did the Chancellor, when he made that unconditional statement, know the conditions of the Act under which he was supposed to be operating, or is it not the case that even in defiance of the legislation that the Tories themselves enacted, such is their bigotry and such their deter-

mination to hand back this prize plum to private enterprise that they will do it even in defiance of an Act of Parliament? As I have said before, I should like to see the case tested in the courts.
I believe that there is a complete contravention of Section 18 (1) of the 1953 Act. How can it be otherwise when the Financial Times and the wizards of finance in the City all agree that this transaction alone will cost the nation £20 million? We know that Staveley and Llanelly resulted in a £4 million loss. Unless English has ceased to mean what it used to mean, how can it be argued that in this way we are getting a price that is financially adequate? I believe that in doing what they are now doing the Government are acting in complete contravention of that Act of Parliament.
The hon. Gentleman repeated the argument that the Chancellor of the Exchequer has used at Question Time. He said that we are entitled to offset the profit that was made in the sale of equities against the losses incurred in the sale of debentures. That leads us to look at what happened to those equities after they had been sold back to private enterprise. When we take the gross proceeds from denationalisation and contrast them with the market value at 10th March of this year, we find that whereas some £130 million was paid at nationalisation, £394 million is now the market value of the same assets; in other words, the people who bought the equities were thereby able to clear a cool £300 million.
It really is not good enough for the hon. Gentleman to say that because we sold the equities at a profit we are now bound to sell the debentures—and we know that they are to be sold—at a loss. Who is making him sell the debentures, anyway? Why does he not keep them? I can find nothing in the 1953 Act that stops him keeping the debentures. Indeed, the provisions of the Act enable him to do so. Of course, as long as we have these Government policies which force the gilt-edged market as low as it is now, one can never see the time when assets of this kind will be saleable at an adequate return.
Replying to my right hon. Friend the Member for Battersea, North (Mr. Jay) the other day, the Chancellor of the Exchequer admitted that as a result of the way in which gilt-edged prices have


been pushed down, the National Insurance Fund itself has dropped some £338 million. We remember what the party opposite said about groundnuts, but the cost of that scheme was not one-tenth of what has been lost to the National Insurance Fund alone. It really is fantastic for the Government to tell us that, whether they like it or not, they are compelled to sell debentures.
Some reference has been made to the gentle persuasion of some steel firms prior to the General Election in conditioning the people's minds to the idea that the denationalisation of steel was good for the British people. I see that in the twelve months prior to the last General Election, the Colin Hurry Survey, which covered nationalisation in general but was paid for mainly by the steel companies, cost £475,000. The Iron and Steel Federation, in its advertising, laid out £287,000, and Stewarts and Lloyds spent £269,000.
When that kind of advertising is used to condition the minds of the people, not merely to deploy an argument that shows the sort of assets either way but merely to denigrate the whole conception of public ownership, when that kind of money—about £1 million—is spent on that kind of project and we then find that those who spent most then cash in on Staveley and other publicly-owned parts of the industry, we are entitled to describe it as chincanery of the very worst type. It is really going back to the days when Lord Holland could play ducks and drakes with the national finance. Those who can believe that we can keep cleanliness and decency in public life with that going on are, indeed, superb optimists.
It has been asked whether R.T.B. will be sold. The hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) made a very pertinent and legitimate point. How will the Government, or I.S.H.R.A., assess the value of R.T.B. in, say, two years from now? The great project at Newport is going ahead—there is vast expansion. I would have thought it utterly impossible to be able to make a correct assessment of what that huge company is really worth.
How, again, do the Government know if they sell under those conditions that they are complying with the 1953 Act, which asks for a financially adequate return for the sale? I thought that the

hon. Member himself made a most valuable contribution when he said that nationalisation in R.T.B. is a great asset to the nation and ought to be allowed to maintain itself.
Of course, on the general argument, my hon. Friend the Member for Ogmore (Mr. Padley) was perfectly right. I should like to hear the Minister refute tonight the argument of my hon. Friend that by denationalising the Steel Company of Wales the Government have placed an extra £1 per ton on the price of steel. If any hon. Member opposite wishes to deny that, I will give way now. Does anyone deny that? [Laughter.] It is accepted. So we have the situation that the Tory Party assembled in power accepts that denationalisation puts an extra £1 per ton at least on every ton of steel produced.

Mr. Padley: In view of the chuckles from the other side of the House, I ought to say that my hon. Friend the Member for Aberavon (Mr. Morris) and I have fought a General Election on that proposition without a single challenge from Mr. Harald Peake or from the Conservative candidates in either Aberavon or Ogmore. So the arithmetic is correct.

Mr. Farr: It is impossible to answer a challenge like that if one does not have the figures to consider. If the hon. Member will send the figures to me or to some responsible person outside, we shall soon have them checked.

Mr. Lee: My hon. Friend gave the facts and the figures. The rough idea of debating in the House of Commons is to try to answer what somebody opposite has said. This is a remarkable situation.

Mr. Jack Jones: I make the further statement that in one of the most modern works in this country the interest charge placed on money borrowed is higher per ton of steel produced than it is in the most decadent works in Britain.

Mr. Farr: So what?

Mr Jones: The "fiddles" again.

Mr. Lee: It is no use dismissing this as a frivolous point. A direct charge is made. I make the charge now that the only effect of denationalisation has been to increase the price of British steel. My hon. Friend the Member for Motherwell


(Mr. Lawson), not for the first time, pointed out today that the gap which was to our advantage in the price of steel we produced as compared with steel produced on the Continent is now narrowing fairly rapidly. The factor I have mentioned, of course, is one of the reasons for it. It is crass irresponsibility for any Government to go ahead with a programme of this type when they know perfectly well that the only effect is, first, to increase the price of steel and, second, to divert the profits of the steel industry away from the public purse into the private purse. Those are the objects of the exercise.
The hon. Member for Harborough (Mr. Farr), like others, said that the Tories have campaigned on the issue of the denationalisation of steel in four elections. He complained—I see his point—that this Government, after nine years in office, have done nothing to denationalise any other industry. He was wrong. They tried to denationalise road transport, but they had to pass another Bill to enable themselves not to denationalise it. Apart from that, this is the only industry which they have attempted to denationalise.
I put the straight question to the Minister. Are we now to take it that Toryism accepts the principle of nationalisation? I think that the hon. Member for Harborough said that seven great industries in Britain are still publicly owned after nine years of Tory Government. Are we to take it now that the Tories accept the principle of public ownership? We cannot stop them denationalising, although we have tried hard.

Sir P. Roberts: I think we accept the scars of Socialism.

Mr. Lee: Let us look at some of the scars. Does the hon. Member think that the electricity industry of Britain is a scar of Socialism?

Mr. Morris: Does he? Answer.

Sir P. Roberts: We really cannot debate these matters now, but, since I am asked, I should like to reply. There is no doubt in our minds that the supply of raw materials, of electricity, of gas, or of the cheap and abundant quantities of coal about which we heard so much

at the time of the nationalisation of the coal industry, are more expensive because of nationalisation than they would otherwise have been.

Mr. Lee: The hon. Gentleman cannot tell me of any large industry in Britain which has had fewer price advances than the British electricity industry. Is the nationalised aviation industry a scar on Britain? Is the gas industry a scar? It is all very well for people to make speeches in the country about the failures of nationalisation. If time permitted, I could argue that the outstanding success of the British coal industry has made it one of the greatest coal industries which the world now has. If other privately-owned industries had had the same production increases over the years as the nationalised coal industry has had, our export prospects now would be rosy instead of being almost tragic.
The country, of course, has voted that we should abolish certain types of nationalisation. We remember very well the brain-washing which went on in those election campaigns. [Laughter.] Yes, the employers can spend £1½ million on putting across a certain type of propaganda, but we cannot match that kind of thing.

Sir P. Roberts: The Opposition were beaten fairly and squarely.

Mr. Lee: The Tories and their supporters spent £1½ million to mislead the people. I challenge every Tory Member in the Chamber now to refute my figures. The steel industry under public ownership has been a great success.

Mr. Morris: There is not much left.

Mr. Lee: My hon. Friend corrects me. Those parts of the industry which are still in public ownership are a great success, and this is one reason why they will not be allowed to remain publicly owned. I would argue, if I had time, and I think I could prove, that any industry now nationalised, had it not been nationalised when it was, would have been in such a state that the British economy today would be sagging hopelessly and unable to compete in the world.
I wonder why the accent is all the time on the denationalisation of steel. Why do not hon. Members opposite argue


for the denationalisation of other industries?

Mr. Jack Jones: Cream off the milk.

Mr. Lee: It is not because they do not accept the principle of nationalisation. They have to accept it. It is simply because they believe that the profits of an industry capable of producing huge profits should go to private people and not to the State. That is the only difference between us. As they are forced to admit after nine years of office that they dare not, or will not, denationalise other industries, it is rather contemptible to go around the country trying to frighten people about the so-called failures of public ownership which is sustaining them to a very great degree.
We have that growing sector of the economy which is neither private nor public—a sector which is ostensibly private but which is kept by State doles. What do the Government propose to do about that? Give it another £15 million loan and a £3 million gift for the new Cunarder? The cotton industry has been mentioned, in which there is £30 million or £40 million of public money. One hon. Member referred to agriculture, which we all accept has a need for subsidies but which no one can argue is a typical competitive private enterprise industry. We therefore go on increasing the range of this sector while the Tories speak about the glories of competitive private enterprise. We have almost reached the point in the big industries at which competitive private enterprise is merely one of those pleasant dreams which hon. Members have when they are allowed to go home late at night.
Another reason why we should not contemplate the denationalisation of Richard Thomas and Baldwins—I deployed this argument last June—is that once it goes out of public enterprise the Government will be quite incapable of working the provisions of the 1953 Act, in which it is stated that, if and when there is trouble between the private owners and the Board, the Government will take over the production of steel. When the Minister has got rid of Richard Thomas and Baldwins, when does he propose to carry out the threat of the 1953 Act for himself to produce steel? He cannot possibly do it. The Government's fears about the success of Richard

Thomas and Baldwins, that which is left of the public sector in the steel industry, is the only reason why they intend to carry out the action of denationalisation.
I have suggested that the atmosphere which has been brought into a great, in many ways the greatest, British industry, is one of sheer flippancy and sheer irresponsibility. I come from an industry which depends on the production of the steel industry. If we think in terms of the products and exports of the great British engineering industry—40 per cent. of all the exports which this country is sending abroad—almost all of it basing itself on a good supply of high quality steel from our own industry—

Mr. Jack Jones: At the right cost.

Mr. Lee: —it is not coincidence that most of the speeches from the benches opposite have been based on the financial aspect of the steel industry. Most of the arguments have been based on the well-being of the nation and on the need for the nation to be able to own and control an industry on which much of its economic prosperity depends. If instead of the brain-washing tactics which modern techniques permit of those who hold the money bags this debate could be the criterion on which the British people decided, steel would be re-nationalised in a very short time from now.

8.49 p.m.

The Minister of Power (Mr. Richard Wood): When there was a recent re-shuffle in the Shadow Cabinet, I was rather worried that I should never have the pleasure again to follow one of those enjoyable speeches of the hon. Member for Newton (Mr. Lee). I have, however, caught him up again. I should like to express my regret about the circumstances in which he is winding up for the Opposition. We all hope that the anxieties of the hon. Member for Southwark (Mr. Gunter) will soon be completely relieved.

Mr. Lee: I thank the right hon. Gentleman.

Mr. Wood: The timing of our discussions on iron and steel seems to follow a regular and fairly well-defined pattern. It seems to us on this side that whenever the Labour Party needs a pick-me-up—perhaps I should say, a pick-it-up


—this great industry comes under review. I remember that last June we had a debate when a spell of Socialist unity seemed to appear more than usually desirable.
The debate on that occasion apparently deplored the decision of the Government to proceed with the sale of Richard Thomas and Baldwins to private interests. I had to make quite sure before I began my speech by looking up the terms of the Motion, because on that occasion we had the presence of the right hon. Member for Belper (Mr. G. Brown), who has been absent from our discussion this afternoon and whose sense of direction on that occasion seemed to be a little uncertain. When I announced that the sale of Richard Thomas and Baldwins was not imminent but was likely to be delayed, the right hon. Gentleman from his sedentary position seemed to complain even more bitterly.
Although at some points during the afternoon the Opposition benches have not been quite so crowded as they are now, I think it safe to assume that the reason this topic has been chosen for debate is the need on the benches opposite for a long, clear battle call. The call to battle on the Health Service is beginning to grow a little faint and on Monday, 6th March, something peculiar seemed to happen to the wave of indignation of the right hon. Member for Belper. It was sustained, as far as I remember, by ten Labour Members. Here we are, just before Easter. The Budget offensive cannot be mounted until we come back after the Recess, but today there is the opportunity, which has been seized with both hands, for the guerillas of the Left flank to be attracted by the excitement of a regular engagement.
Perhaps it would be inappropriate for me, and it might be lacking in taste, to inquire into the motives that have led the Opposition to debate this subject today. Whatever the motives, however, extremely little has been said about the future of the industry, apart from the question of nationalisation or denationalisation, which has been bandied about a good deal. There has been a lot of discussion about steel finance, but apart from the speeches of my hon.

Friend the Member for Weston-superMare (Mr. Webster) and my hon. Friends the Members for Sheffield, Heeley (Sir P. Roberts) and Sheffield, Hallam (Mr. J. H. Osborn), there has not been much talk about the prospects of the industry.
I welcome this debate because it gives me the opportunity to look at the present state of the industry and to say a little about its future prospects. As I do so, I should like to try to pick up one or two points which have been raised. I begin by picking up one or two special points which seem to come better at this stage than later. The hon. Member for Aberavon (Mr. Morris) and the hon. Member for Newton complained about the announcement of the Llanelly sale just after Parliament had risen for the Summer Recess last year. That sale was completed only on 31st July, the reason being that the accountancy year of the firm—Duport—ended on that date. The firm was, therefore, not anxious beforehand to complete the sale, which would have made it necessary to consolidate the Llanelly accounts with its own. This was a decision of the firm. It was, therefore, announced by the Government as soon as the decision had been taken.

Mr. H. Wilson: This implies, then, that the negotiations were complete before Parliament adjourned but, for the financial convenience of this company, it was deliberately delayed so far as an announcement in the House was concerned. Even if that were not so, is the right hon. Gentleman seriously suggesting that the financial convenience of a private company must take precedence over the traditions and financial procedures of the House?

Mr. Wood: I am not suggesting that at all, but I am saying that this sale was not completed until 31st July.

Mr. Morris: rose—

Mr. Wood: May I continue? This has to do with the point that the hon. Member raised. The second sale was not completed until 12th September, and if it is complained that it was also intolerable to announce the Staveley sale while Parliament was in recess it would seem ridiculous to wait until Parliament


returned at the end of October before announcing the details.

Mr. Morris: What does the right hon. Gentleman mean by "completed"? He says that the Llanelly sale was completed on 31st July, but that was a Sunday. Is he suggesting that it was completed that day or was it completed much earlier and not signed until that Sunday?

Mr. Wood: No. The accountancy year ended on 31st July and therefore the sale was not brought to completion, or not finished, before that date. It may have been 1st August and therefore it could not have been announced to Parliament because the sale had not taken place. The other sale we tried to announce as soon as possible, on 12th September, rather than wait until the end of October.

Mr. Morris: rose—

Mr. Wood: I have a great deal to say and I now want to answer another point made by the hon. Member. He asked about the losses made by the company in the period up to the date of sale. The period was a little over forty weeks, but the loss was running at an annual rate of £110,000. This compares with an annual rate of loss in the two previous years which the hon. Member mentioned as £172,000 two years before and £53,000 in that year.
I should like to answer a specific point which the right hon. Member for Huyton (Mr. H. Wilson) asked my hon. Friend the Economic Secretary and which my hon. Friend said I would try to answer. I am afraid that it is impossible to say how far the underwriters have sold the securities that they applied for and so have benefited by the premiums at which some of them now stand. I asked for the information but it was not available, but it is safe to say that the present premiums would not have arisen if there had been extensive selling by the underwriters. Therefore, it is no good the right hon. Gentleman trying to make too much of that point, because if the underwriters had sold a large proportion of the securities, then clearly the market would have collapsed. I should like to turn now to two points mentioned by the hon. Member for Ebbw Vale (Mr. M. Foot). I am sorry that he is not here.

Mr. H. Wilson: I should like to apologise on behalf of my hon. Friend the Member for Ebbw Vale (Mr. M. Foot). He asked me to say to the right hon. Gentleman that he particularly wanted to be here to hear the reply, but he is in a television programme in the most respectable possible company and he apologises for his absence.

Mr. Wood: I am sorry that I cannot be looking at the hon. Member. It is my loss, because I wanted to tell him that the message that he said he sent to me during his election campaign never reached me. I would have been the wrong Minister to have been invited to talk about nationalisation or denationalisation. The hon. Member ought to have addressed the message to the Chancellor of the Exchequer. I never received his message. I thought it highly suspicious that it was after his election, with a very good majority, that he mentioned this to me and I heard about it for the first time. If he had invited me I naturally would have been only too ready to go. I shall mention to the hon. Member some time the disastrous effect that that would have had on his majority.
The other point raised was the question of the so-called loss of £20 million, the difference between the £105 million nominal value and the sale price of the securities. There can be absolutely no doubt from the figures that I and my hon. Friend have given that the sale price of the securities was less than the nominal value. I think that both hon. Members who raised the point must have omitted to have listened as carefully as they normally do to my hon. Friend when he was giving the explanation of this discrepancy between £105 million and £80 million.
The Exchequer is continually borrowing on long term in order to meet the long-term requirements for new money, and I think that my hon. Friend mentioned as an example the nationalised industries and said that the Exchequer could get it at the prevailing rate only. This money can be raised by the Exchequer either by its issuing its own securities on appropriate terms or by selling at their current market value other securities such as, in this case, those held by the Iron and Steel Holding and Realisation Agency.


I share the belief of the hon. Member for Newton and the hon. Member for Ebbw Vale that in fact it makes very little difference to the Exchequer which method it chooses.
I should like to say something about the current iron and steel position. The principal feature in the home market is the present strength of demand for steel. This demand has been growing steadily throughout 1960, and a survey recently made by the Board of Trade shows that it is likely to go on strengthening. The production of commercial vehicles and tractors continues high, and the output of motor cars, as we all know, has shown a considerable recovery from the low rates of December and January.
Exports have started the year well and are likely to be more in 1961 than they were in 1960. It has been said by several of my hon. Friends that the total steel requirements this year are likely to be well within the capacity of the steel industry, and that suggests that there will be no significant supply difficulties during this year.
I should like to say something about the progress of the schemes at Richard Thomas and Baldwins and at Colvilles. The large works at Newport, the Spencer works, are expected to come into operation in the spring of next year, 1962. Hon Members will remember that this project, which was originally designed to produce about 1 million tons of steel a year, was extended in December, 1959, by about half as much again.
Colvilles are expected to come into operation next year also, a little later in July. There was recently I understand, an accident when a ship which contained two of the housings for the slabbing mill at Colvilles sank in the River Mersey. I think that these are being recovered and the chairman does not think that it will delay the starting date.
Colvilles' scheme of expansion which the Iron and Steel Board approved in January, 1960, is now to have a capacity of about ½ million tons of sheet per annum instead, as originally planned, of about 230,000 tons. Colvilles, in whom I know the hon. Member for Motherwell (Mr. Lawson) is particularly interested, is giving me information from time to time about the progress of its project and

the rate of expansion. In the light of the reports it has made and in view of the probable starting date of the mill being July, 1962, I have agreed with the company that the review of the total amount of the Government loan of £50 million, which under the terms of the agreement was due to take place after 1st October, 1962, should now take place in the first quarter of next year. Otherwise, it would obviously be a dead letter.
The House has taken a great interest in the past about the position of sheet. For the first time since the war, there is a prospect now of really adequate capacity for the production of sheet, and the margins anticipated in 1964ߝ65 may in fact give rise to the opposite suggestion that there has been over-investment. But I am convinced that that is not so, because the production estimates include no allowance for losses. There must be great uncertainties attached to any figures of expected demand in the future when all those who know about the industry know what fluctuations can be caused by all kinds of events. The growth of demand to the extent at present suggested is likely to be only a matter of time, and if, as we have seen examples, sheet steel is in ample supply, that of itself may increase the demand.
I pay tribute to the Iron and Steel Board, which has taken a forward look in many respects, particularly in respect of the provision of steel sheet in this country. I think that it can claim a considerable achievement in its general planning and also in its planning for additional strip mill capacity. The industry believed that, although the greater capacity might ultimately be required, the need itself was unlikely to arise as soon as the Board thought. The Board has continually pressed for an early start to new capacity and has achieved this objective within the powers open to it under the Iron and Steel Act.
Particularly noteworthy is the Board's initiation of discussions which led to the arrangement between the Steel Company of Wales and Richard Thomas and Baldwins whereby slabs from the Steel Company of Wales, at Port Talbot, were to be processed at the Spencer Works and hot coil was later to be returned to the Steel Company of Wales for further processing into sheet and tinplate.
The Board's achievements in the field of development have not been confined


to sheet. It has also recognised the serious deficit likely in plate supplies and, through discussions with the principal plate producers, it has secure plans for adequate expansion of plate capacity.
As well as having paid this tribute to the Iron and Steel Board, I should like to join my hon. Friend the Member for Weston-super-Mare in the tribute which he has paid to the Iron and Steel Holding and Realisation Agency, whose activities have been discussed at considerable length this afternoon.
I have spoken about the Iron and Steel Board because it seems to me to be a factor in this great debate. I am referring not only to the debate this afternoon but to the whole controversy between political parties about nationalisation and denationalisation, to which I feel, frankly, that the Labour Party has always been unwilling to give full weight, because the controversy has always, or very nearly always, been presented in very crude political terms—on the one side, State ownership; on the other side, unfettered private enterprise.

Mr. Lawson: rose—

Mr. Wood: The hon. Gentleman must have anticipated my thoughts. I was about to say that he spoke about the modification of competition which has taken place in the steel industry. While on this point in relation to prices, in which the hon. Gentleman expressed some interest, I should like to draw his attention to the appendix to the Iron and Steel Board's Annual Report of 1959. The hon. Gentleman said that no comparison was made between home prices and prices on the Continent.

Mr. Lawson: I did not say that. I said that the comparison was continuing, but it was now given in a form which did not enable the ordinary layman to draw any conclusion, whereas formerly the Iron and Steel Board boasted about the situation by giving a chart to show the great gap between the two sets of prices.

Mr. Wood: I do not know who the hon. Gentleman has in mind as an ordinary layman, but as long as the ordinary layman can read he will find that the appendix is set out in a reasonably comprehensible form. I think that the ordinary layman would get a pretty good idea of the comparison from looking at it.

Mr. Lawson: Is it not the case that until two or three years ago, perhaps two years ago, the British steel industry regularly boasted that steel prices in this country were very much cheaper than Continental prices and is it not the case now that the European Coal and Steel Community is telling us that its prices are lower than British prices? Is not that a challenge?

Mr. Wood: That is obviously a most important point, but the hon. Gentleman or the ordinary layman on reading the tables would get the impression of British prices being on the whole lower than Continental prices substantially confirmed. The prices in this country, as the hon. Member for Motherwell knows, are based on a foundation of reasonable profit with proper depreciation at a new and efficient works. Clearly, those are maximum prices and would, even if they were not fixed as maximum prices, be subject to any decision of the Restrictive Practices Court.
I was saying that, with the exception of the hon. Member, the controversy in this matter is generally presented as being State ownership on one side and unfettered private enterprise on the other. The Opposition have continually used grandiose terms about this great industry serving the nation, implying that only through nationalisation can the public interest be secured.
I was interested to hear the hon. Member for Rotherham (Mr. Jack Jones), who has the reputation for robust commonsense. He suggested a basis of nationalisation which would certainly cover the land and almost certainly nearly all production, distribution and exchange. He chose that basis as his criterion for the nationalisation of the steel industry.

Mr. Jack Jones: My argument was based on what comes out of the land—iron ore. I said nothing about farmers. They can well speak for themselves.

Mr. Wood: If the hon. Member's argument was based on iron ore coming out of the land, then it could just as well apply to corn and everything else from the land. The concept of the steel industry acting in the national interest in private hands seems to be incomprehensively subtle and doctrinally unattractive to the Opposition, but we are


encouraged, by the success of such a policy, to press ahead to the completion of denationalisation.
My hon. Friend the Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) referred to prior charges. I regard the sale of the prior charges as being both legally and in commonsense, essential to denationalisation. He referred to me and my hon. Friend the Economic Secretary as financial masochists, and the hon. Member for Ebbw Vale said that we were fiscal sadists. Neither my hon. Friend nor I is a masochist or a sadist, but it cannot be held that the industry is denationalised if the State continues to hold a certain proportion of prior charges. We are encouraged in our view of denationalisation by the approval of the electors at three successive General Elections.

Mr. Morris: But not in the steel constituencies.

Mr. Wood: That is an interesting argument. It rather suggests that the Government's defence policy should be decided by the electors of Portsmouth and Aldershot. If pressed to its ultimate conclusion, it would make my hon. Friend the Member for Kidderminster (Mr. Nabarro) the arbiter of the Government's policy for carpets. [HON. MEMBERS: "IS not he?"] No, he is not.
Each election since 1951 has seen the return of more Conservatives who are pledged to denationalise steel, and fewer Socialists who are wedded to the idea of State ownership. Although it might be impudent for me to say so, I offer the opinion that, while they remain wedded to it, their numbers here look like becoming smaller and smaller. My answer to the question of how we justify denationalisation is to compare the mandate with which were elected in 1951, and renewed twice since then, with the unjustified folly of the Socialist Party in forcing through nationalisation of this industry just before the General Election of 1950, when the electors were about to show their enthusiasm for more nationalisation by reducing the Socialist majority from 200 to six.
We are convinced that the country wants denationalisation. We do not consider—and I put this in mild terms—that

the results, broadly, of nationalisation are so impressive as to sustain any coherent argument in favour of such an organisation for an industry such as the steel industry. We believe than an industry of this range and importance must be subject to some supervision, but that public supervision can well be secured without State ownership. Therefore, we intend to press on towards a solution which not only commends itself to good sense, but has been three times endorsed by public approval.

Mr. H. Wilson: The whole House has enjoyed the right hon. Gentleman's very agreeable and at times very witty speech, however much we have disagreed with its basic content. We are grateful to him and to the Economic Secretary for their courtesy in giving way and trying to answer some of our questions. However, there was one very important question which my hon. Friend the Member for Newton (Mr. Lee) and I put to which we have not had an answer. In view of the figures which have been given of Staveley and Llanelly and the very strong feeling that these companies were sold at a loss to the taxpayer, so that there was not an adequate return, and in view of the terms of Section 18 (1) of the 1953 Act, will the right hon. Gentleman say whether the Government will now agree to an independent inquiry into the adequacy of the return and, if not an independent outside inquiry, an inquiry by a Select Committee?

Mr. Wood: No, Sir. The adequacy of the return which is required under Section 18 must take account of all the factors, which include the losses which are made in the company and the need for new investment, all of which my hon. Friend the Economic Secretary mentioned. Because there has been a book loss on the transaction does not prove that there has been an inadequate return. For the reasons I mentioned, in the case of the last sales, although there was a book loss, it was as convenient for the Exchequer and for the British public to raise the money for longer-term borrowing in that way as it would have been for the issue of securities. I cannot agree with the right hon. Gentleman's suggestion.

SOUTHERN RHODESIA (CONSTITUTION)

9.17 p.m.

Mr. G. M. Thomson: I wish to raise the subject of the Report of the Southern Rhodesia Constitutional Conference, contained in Command Paper 1291.
In view of the very grave and serious events which have been taking place both north and south of Southern Rhodesia, it is important that the Government should have an opportunity to find out the views of the House on this agreement. In some respects the agreement contained in this White Paper marks a considerable advance. When Sir Edgar Whitehead first raised the matter with Her Majesty's Government he was seeking simply the removal of the reserve clauses in the Southern Rhodesian Constitution, on the ground that the people on the spot in Salisbury knew a great deal better than Her Majesty's Government in London what was the right thing to do in Southern Rhodesia.
Sir Edgar Whitehead has retreated a long way from that decision, and that is a very good thing. The Secretary of State for Commonwealth Relations is entitled to his share of credit for the shift in Sir Edgar Whitehead's position. The right hon. Gentleman called the White Paper a miracle, in the sense that it was a miracle to get both Sir Edgar and Mr. Nkomo, the leader of the National Democratic Party, to subscribe to the same document. Perhaps the right hon. Gentleman was a little too much of a miracle worker in this connection and worked a little too swiftly, for miracles sometimes look a little different the morning after.
When Mr. Nkomo and the National Democratic Party began to express some of their reservations about this document, we began to see that to solve the many and difficult problems in Southern Rhodesia we would need not one miracle but several, struggled for painfully and patiently over a considerable time.
Some hon. Members opposite who have taken an interest in these matters have not performed any notable service by presenting the findings in the White Paper as though they were a model constitutional agreement, nor by seeking to

use them as an argument in the constitutional discussions now going on in connection with Northern Rhodesia. What is politically possible in one Central African territory at any time is not necessarily politically possible in another. These matters have to be dealt within the light of the conditions existing in the territory or area concerned. The question which the House must decide is whether the provisions of the White Paper justify Her Majesty's Government giving up their reserve powers in respect of Southern Rhodesia.
It may be true that the possible use of these reserve powers has been somewhat academic during their whole existence. They have never been used since they were first written into the Constitution, in 1923. Indeed, one could adopt a rather cynical attitude towards the legal superstructure of discrimination erected with great deliberation in Southern Rhodesia without any use being made by a British Government of the reserve powers to prevent this taking place.
Nevertheless some of the enactments in Southern Rhodesia over the years might have been a good deal worse if there had not been a knowledge on the part of successive Southern Rhodesian Governments that these reserve powers existed. If my right hon. Friend the Member for Wakefield (Mr. Creech Jones) had been here tonight he might have been able, from his own experience as a former Secretary of State, to indicate occasions on which the Southern Rhodesian Government made it quite plain that in shaping their policies they were very conscious of the fact that there were limits over which they could not step because of the existence of the reserve powers.
We must remember that the whole atmosphere in Africa has changed out of all recognition during recent years, with the revolutionary events that have taken place there. Although the reserve powers have not been used in the past, in the new situation which exists they have a new potency. I am, therefore, very glad to see that according to the terms of the White Paper, Her Majesty's Government will still be able to legislate for Southern Rhodesia, and that the British Government's position is reserved in the matter. I presume that this means that Her Majesty's Government would


still be able to impose a new Constitution on Southern Rhodesia if final agreement could not be reached. I say that in order to underline the importance of the reserve powers.
There is a paradox in the situation that has arisen. Sir Edgar Whitehead raised this matter because he was primarily seeking freedom from any semblance of political control from London, but by the very act of raising the matter he has given the British Government a much greater chance to influence constitutional developments in Southern Rhodesia than previously existed, in practice. Hon. Members on this side of the House plead with the Government to make the maximum use of the opportunity now being offered. The Government cannot surrender these reserve powers except on conditions which are agreed by the African majority.
It may be said that this indicates a partiality on the part of the Government, but in the circumstances there is a great deal to be said for the British Government's showing a partiality towards an under-privileged majority. We also have a tremendous responsibility for the European minority in Southern Rhodesia. In present circumstances they face appalling dilemmas, which would cause any sensitive person to sympathise with them.
Southern Rhodesia has been the home of many of these people for generations. Their contribution to a prosperous Southern Rhodesia in the years that lie ahead is vital to that country. But I am convinced that the best help Her Majesty's Government can give to the European minority in Southern Rhodesia is to use all our influence to create a more just society there and one more in line with the realities of the world as we know it. I think that sometimes the European settlers in Southern Rhodesia are not the best judges of the realities of the world in which they have to live and in which we have to try to solve difficult problems.
Does this White Paper fulfil the conditions under which the British Government would be justified in surrendering these reserve powers? These conditions are spelt out fairly clearly by the National Democratic Party in a conference which it has been holding in the last few days. It has indicated some of the conditions which must be fulfilled

before it can participate in the campaign for the referendum and the operation of a new Constitution when that is finally arrived at.
I wish to say a word about these conditions. The first is that those at present detained in Southern Rhodesia without trial should be released and that the National Democratic Party should have freedom to conduct political meetings in areas of the country where it is at present prohibited from so doing. I should have thought that an elementary condition for participation by any political party in a campaign for a new Constitution. I hope we shall hear from the Secretary of State that the Government fully accept that as a basic condition of any protest in this matter.
Secondly, the National Democratic Party laid down as a condition that there should be much more information than is at present available about membership of the proposed Constitutional Council, and we should be grateful for some expression of opinion about this matter. I will refer at the moment merely to one aspect of this problem. In paragraph 10 of the White Paper it is suggested that one of the duties of the Constitutional Council will be to declare whether Bills are unfairly discriminatory. I am puzzled by the use of the word "unfairly" in front of "discriminatory". Surely a Bill is discriminatory or it is not. Does this qualification mean that it is intended that the Constitutional Council should act only if something is flagrantly a Bill involving discrimination, and should we not operate a rigid test on this obsolutely vital question?
The third condition of the National Democratic Party, and by far the most important, is that it must have some guarantee about the line of policies to be pursued in the future if it is to feel confident in good co-operation in connection with the new Constitution. It is stated, in paragraph 33 of the White Paper, that in the time available the conference was not able to consider provisions in the present situation dealing with native reserves and the Land Apportionment Act. However, it was agreed in principle that the powers of the United Kingdom Government in relation to these matters should be eliminated provided that fully effective safeguards could be devised.
I think that in some ways this is the most important responsibility which rests on the Government in dealing with this problem. I should have thought it eminently reasonable that the National Democratic Party in its discussions on this matter should insist that the repeal of the Land Apportionment Act, which is at the basis of the discrimination practised in Southern Rhodesia should be written into the proposed Constitution. I hope we shall find that the British Government will use all their influence in that direction.
This question of the repeal of the Land Apportionment Act raises the more general question whether the human rights provisions in the proposed Constitution are to be made retrospective. At the moment, the Southern Rhodesian Government enjoys, I should have thought, some of the most widespread and some of the most indefensible powers in regard to the life and liberty of the subject. If, in fact, they are to go on enjoying those powers, without a declaration of rights operating backwards as well as forwards, it is not a situation which can enjoy very much support or give much substantial meaning to this Declaration of Rights.
As far as I can make out, the proposals are merely that the Declaration of Rights should operate in connection only with legislation passed after the enactment of the new Constitution. I do not see myself that that is at all satisfactory, and I hope that the Secretary of State can give us further enlightenment on that point.
There are two other matters that I should like to raise with the Government on the operation of the general rights provisions. First, I notice that money Bills are to be exempted completely from the consideration of the Constitutional Council, yet it is well known from past experience that the allocation of public funds may be one of the most powerful instruments of discriminatory policy. What is to happen if the Southern Rhodesian Parliament has money Bills in which they are operating discriminatory policies? Are they to be exempt from consideration by the Constitutional Council?
The other point I want to put to the Government is that one of the most important safeguards is the final right of

appeal to the Judicial Committee of the Privy Council. This is bound to be a very long and expensive process. At the moment, there are the most limited provisions for legal aid in Southern Rhodesia, and to give reality to these safeguards I hope there will be a provision that if there is a council certificate that a citizen is justified in taking a matter through the courts on the question of these discriminatory bills, he will be entitled to full, free legal aid, allowing him to exercise his constitutional rights.
Finally, we come to the franchise proposals in the White Paper, and these, of course, are the very heart of the problem. I think that it would be a tragedy if Europeans in Southern Rhodesia were to regard these franchise proposals as long-term proposals. I think that it would equally be a tragedy if the Africans in Southern Rhodesia were to regard them as not worth taking un at all. That would be the way to racial bitterness which can in the end benefit no one at all.
Mr. Nkomo, the leader of the National Democratic Party, is bound to go on campaign for universal suffrage, but he might be wise to regard a block of N.D.P. Members of Parliament in the Legislative Council as an important means to moving towards a fully democratic Southern Rhodesia in due course. In working out the very many details that still require to be filled in in the proposed Constitution, the Europeans would be very wise indeed to be as generously minded as they possibly can be when considering these matters, because, in the long run, if steady and peaceful progress can somehow be maintained in Southern Rhodesia, the Declaration of Rights and the provisions that go with it will be more important to Europeans in Southern Rhodesia than they will to the African community there. The fact that the African national leaders have been prepared, with all their reservations, to accept these provisions means that they are ready to extend to the European minority the protection which the Africans themselves are still struggling to obtain for themselves.
I think that this is a very notable advance indeed, and that it is along that way that lies the real hope of resolving the very great difficulties in Southern Rhodesia. I hope that Her Majesty's


Government will use all their influence to ensure that Southern Rhodesia keeps along that path. I hope that they will give us assurances that they will not surrender their rights, but will use all their influence towards being absolutely sure that democratic progress is to take place in Southern Rhodesia.

9.35 p.m.

Mr. John Stonehouse: In his remarkable speech last night, with which I am sure 99 per cent. of the House agreed, the Secretary of State for Commonwealth Relations expressed his opinion about apartheid and race discrimination. I, for one, was very much moved by the way in which he expressed those sentiments.
However, there was one phrase he used with which I venture to disagree. He said:
Everywhere else outside South Africa Governments are trying, more or less successfully, progressively to eliminate racial discrimination between their citizens."—[OFFICIAL REPORT, 22nd March, 1961; Vol. 637, c. 528.]
That cannot be said yet of Southern Rhodesia. The Government of Sir Edgar Whitehead have not yet begun to take really energetic measures to dismantle the structure of race discrimination to which my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson) has been referring. We have no assurance yet on the basis of the constitutional proposals which the Commonwealth Relations Secretary has brought back from Salisbury that Sir Edgar Whitehead is trying to change the policies of the ruling United Federal Party in such a way as to ensure that the African people in Southern Rhodesia will be able to exercise their economic and political rights.
It is on this point that the proposals which the Secretary of State has put forward are falling down. They can work only if the Africans have a clear guarantee that the discrimination which is practised against them will be stopped because that discrimination prevents them from taking the economic opportunities of the Europeans and will prevent them from gaining the incomes necessary to rise to become electors on the A roll, which according to the White Paper, will have the major political power in the country. The B roll, which enables people with a lower income to qualify in

the constituencies, will be devalued to some extent. Therefore, I submit that we have to look at this not only on the basis of the political aspect of the White Paper but of the economic aspects that lie behind it.
My hon. Friend has referred to the Land Apportionment Act. I should like to look at that a little more closely because it is the essential aspect of this discrimination against the African population in Southern Rhodesia which they most resent. In Southern Rhodesia—I quote now from figures provided in Cmnd. 1149, which was the survey of developments of the Committee of officials reporting to the Monckton Commission—the European area comprises 51,900,000 acres, whereas the total area available for the Africans is only 41,800,000 acres. So the 10 per cent. of the population has over half the available land area, whereas nine-tenths of the population has only about 40 per cent.
This means that the African population, being overcrowded in their own reserves, are not able to get an income from the growing of cash crops in the same way as European farmers can. The Europeans in Southern Rhodesia, who number just over 200,000, have a land area available to them exclusively larger than the area of England and Wales combined.
We have not yet had any clear assurance that this structure, which is quite similar to apartheid in the Union, will be dismantled. It applies not only in country areas, but also in the towns. Anyone who has been to the towns of Salisbury, Bulawayo, Tali, and the other centres in Southern Rhodesia is struck by the fact that the Africans always live on the outside. They are not able to participate in the community life, the social life or the economic life of the towns, because the towns are included in the European designated areas.
If the proposed constitutional advance is to mean anything at all, it must mean that the Africans must be allowed on the basis of equality, without any discrimination on the ground of colour, to have the same land rights as Europeans and the race discrimination aspects of the Land Apportionment Act must be entirely swept away, otherwise Africans are bound to be suspicious of the constitutional proposals.
There is another aspect of the economic position of Southern Rhodesia which is often overlooked. The larger part of the national income of the country flows to the European minority or to European-controlled companies. To take 1958 as a sample year, it appears from the Report of the Committee of Officials that £85 million was the total of wages and salaries paid to the European, Asian and coloured population of Southern Rhodesia, which is about 10 per cent. of the population, whereas the African population, representing nine-tenths of the total population, received only £49 million in wages and salaries. The average income for the European and Asian community was £995 per year, whereas the average income for the Africans was only £80 a year. That figure does not include the large number of peasants and people living on the farms who are not included in this figure of the employed population.
The Secretary of State for Commonwealth Relations is aware of the discrimination in regard to land allocation. He has looked at the situation in Southern Rhodesia, and I know where his sympathies lie. There is also discrimination in regard to the allocation of skilled jobs. Many Africans who are receiving low incomes are capable of doing the more skilled jobs. In fact they are doing them now, although they are not described as skilled occupations. They are denied the opportunity of receiving the higher incomes which are almost automatically paid to white men because their skins are white.
This sort of discrimination—discrimination in land allocation and in economic matters—must be done away with if any of these political proposals are to be successful. They are the main reason why the Africans reject the constitutional proposals which the Secretary of State is proposing to us.
Another reason why the Africans reject these proposals is that the Government of Sir Edgar Whitehead have not shown their sincerity in allowing political free-down in the territory. As my hon. Friend the Member for Dundee, East indicated, there are still Leaders of the African political party in Southern Rhodesia who are kept in prison without trial. When I was in Salisbury in February, 1959, I met some of these men. I found them to be sincere and dedicated men. If they

lived in Dar-es-Salaam they would be referred to by all hon. Members opposite as "moderates" and they would be working with Mr. Julius Nyerere. Because they happen to live in Southern Rhodesia and have had to contend with the monopoly of political power which has hitherto been in the hands of the European minority, because they express an interest in "one man, one vote" and political progress for the African, they are dubbed as extremists, fanatics and all the rest of it.
I have met these men, and talked to them. I know them fairly well, and I respect them. They have a great contribution to make to political development in their own country, but where are they now? Many are still languishing in Mirandellas Prison. And the man with whom the Secretary of State for Commonwealth Relations has been negotiating in the last few months is the man who put them there—Sir Edgar Whitehead. I ask the right hon. Gentleman to plead with Sir Edgar Whitehead for the release of these men before these proposals can be put into operation.
We ask for only a little. Surely, as a test of the sincerity of the United Federal Party and the Government of Southern Rhodesia, we can ask that the colleagues of Mr. Joshua Nkomo, Mr. Leopold Takawira and other leaders of the National Democratic Party should be released in the same way as Dr. Hastings Banda and Mr. Kenneth Kaunda in Nyasaland or Northern Rhodesia were released. This is a necessary prerequisite for confidence to be established between African and European in Southern Rhodesia.
Another thing that concerns the Africans is that the Government have used the most repressive measures to intimidate the African population. There is the Vagrancy Act, which has been criticised in this House, not only from this side but from the Tory benches. Under the terms of that Act, passed last year:
… any person who is unable to show that he is living by honest means and has a settled way of honest living
can be arrested by a policeman without warrant. Some hundreds of people have been arrested under that Act.
The Vagrancy Act has been condemned by lawyers in Salisbury as well


as in this country. It allows tremendous power to the Government of the day, and until such Acts as this are revoked we cannot expect the Africans to have any confidence in the Government of Sir Edgar Whitehead or any faith in the political party he represents. As is well known, men arrested in this way can be sent, after a trial to which the public are not admitted, to mines and to farms where they are cut off from communication with the outside world. It is because so many people have been subject to arbitrary arrest under this Act that the people of Southern Rhodesia are most suspicious about the sincerity of Sir Edgar Whitehead.
Another Act that causes the Africans great concern is the Law and Order (Maintenance) Act. It has been described, not by members of the Labour Party but by lawyers and churchmen in Southern Rhodesia, as an Act similar to the measures adopted in Nazi Germany. Section 44 states:
Any person who publishes or reproduces any false statement, rumour or report which is likely to cause fear, alarm or despondency among the public or to disturb the public peace shall be guilty of an offence and liable to imprisonment for a period not exceeding seven years unless he satisfies the court that because such publication he took reasonable measures to verify the accuracy thereof.
It goes on to state:
For the purpose of this section 'statement' includes any writing, printing, picture, painting, drawing or other similar representation.
That Act, again, gives tremendous power to the Government of the day, and it cannot be expected that the Africans will agree willingly to new Constitutional proposals while that sort of threat hangs over their heads.
I agree entirely with what my hon. Friend said about the protective clauses in the Constitution. I hope that the Secretary of State will tell us tonight that the constitutional proposals will not be put into operation in the form in which they are presented in the White Paper unless he is absolutely satisfied that this is what the Africans really want. I submit that he really did exaggerate the degree of success he had at the constitutional conference. I believe that paragraph 31 of the White Paper in particular is not only factually in-

accurate but wholly misleading. It is quite wrong to suggest that
The conference agreed that the decisions to enshrine a Declaration of Rights in the new Constitution, to establish a Constitutional Council, and to permit appeals … would provide safeguards against discriminatory legislation as fully effective as those at present afforded by the powers reserved to the United Kingdom Government.
The Conference did not agree upon that. The National Democratic Party in numerous statements itself and by Mr. Joshua Nkomo has made it clear that that is not its understanding of any agreement which was reached.
In this connection, I shall quote from a letter written by Mr. Nkomo to the Secretary of State on 17th February. He said:
Further to my interview with you, I would like to affirm the views of my delegation and those of the National Council of my party who have sent me to put their stand once more to you. My delegation made it perfectly clear that they did not accept the franchise system and representation in the agreement. My party has endorsed this rejection and sees nothing else to support, when the means of effecting their political influence are denied to them through a clever fancy franchise and a white-dominated Parliament.
This criticism of Mr. Nkomo applies particularly to the question of the reserved clauses.
What argument has the right hon. Gentleman against the proposal which has already been put to him that there should be a referendum of the African population in Southern Rhodesia to ask them whether or not they agree with the elimination of the reserved clauses? There is to be a referendum of the mainly white electorate to see whether they agree with these constitutional proposals. Surely, these proposals are just as important, if not more important, to the African population. Why should not they be consulted?
Before the Minister says that a referendum would be too complicated or would establish a precedent, I will refer him to paragraph 309 of the Monckton Report which advocated, in the case of proposals for the secession of the territory, the holding of a referendum not merely of the white electorate but of the population as a whole. Consideration of the proposals for secession, it said, might be
followed by a referendum, perhaps requiring a 60 per cent. majority".


and the responsibility for determining whether consent had been given by the population through such a referendum would rest entirely with Her Majesty's Government.
If this can apply in regard to a proposal for the secession of one of the territories of the Federation, why should not it apply to this most important question of the reserved clauses in the Constitution which 2½ million Africans in Southern Rhodesia regard as their protection against what they think of as white dictatorship in their own country?
I hope that the Minister will not propose that the reserved clauses should be removed before we are absolutely convinced that the Africans want them to be removed. If we remove them hastily in that way, it will so build up tension and animosity between white and black in Southern Rhodesia that no constitutional proposals will be effective and we will have a breakdown in the relationship. I hope that the right hon. Gentleman will regard the other proposals in the White Paper merely as a stage in the process towards democratic rule.
We have gone through these stages in Tanganyika. I remember how many hon. Members opposite foretold woe and disaster when limited measures of advance were put into operation in Tanganyika four years ago. I remember how despondent they were about that experiment, how depressed they were when the United Tanganyika Party lost the first election and how they regarded Mr. Nyerere at that time as an extremist. They said the same thing about Kenya in the past. Now they are beginning to realise that it is only on the basis of a genuine participation by the African population in these territories that even the stability of the Europeans can be guaranteed. What has been proved true in Tanganyika has been accepted even by the Conservative Party with acclamation. What has been proved true in Kenya will also certainly prove true in Southern Rhodesia.
Like all my hon. Friends, I am as concerned as much with the fate and future of the European population in Southern Rhodesia as with the future of the African majority. We believe that only through the spreading of democratic opportunity to the Africans as well as to the Europeans can a spirit of friend-

ship and good will be built up, a spirit of stability established and the country brought to a stage at which white and black can live in real friendship and understanding and get away from this race discrimination, this tension, this intimidation, which is a necessary part of life in Southern Rhodesia when a small minority tries to dominate the overwhelming majority.

9.58 p.m.

Mr. Ronald Russell: I shall detain the House only for a minute or two, particularly as I was fortunate enough to catch Mr. Deputy-Speaker's eye in the debate on South Africa last night.
I am provoked into intervening by something which the hon. Member for Wednesbury (Mr. Stonehouse) said. He described the detainees at Mirandellas as moderate Africans. I saw those detainees about six weeks ago in company with two of the hon. Gentleman's hon. Friends, namely, the hon. Members for Greenwich (Mr. Marsh) and Batley and Morley (Dr. Broughton). I will not commit them on their views of the matter, but I have no hesitation whatever in saying that those detainees were complete and utter fanatics. That is why they are where they are now. To compare them with Mr. Nyerere is like comparing the hon. Member for Wednesbury with his right hon. Friend the Member for Middlesbrough, East (Mr. Marquand). There is all the difference in the world. Mr. Nyerere is a moderate African, and that is why Tanganyika is a success. To describe those detainees as moderate is absolutely unmitigated nonsense.

Mr. Stonehouse: Before the hon. Gentleman continues with his rather ridiculous statements, may I tell him that my hon. Friend the Member for Greenwich (Mr. Marsh) has been good enough to tell me about his conversations with the men detained at Mirandellas? My hon. Friend would wholly disagree with the hon. Member's assessment of their character.

Mr. Russell: The hon. Gentleman would be perfectly entitled to disagree. That is why I did not propose to quote his opinion, but merely my own. To compare Mr. Nyerere with those detainees is completely and utterly ridiculous.
Secondly, I would put this to the hon. Gentleman. There is all the difference in the world between Southern Rhodesia, which is a State, as the hon. Gentleman admits, of 200,000 Europeans as well as 2½ million Africans, and Tanganyika, which is a completely African State. Mr. Nyerere, in Tanganyika, is working on a partnership basis. One thing he did was to invite Mr. Vaisey, the former European Finance Minister, to join his Government. The detainees in Mirandellas and Mr. Nkomo are out for African domination and no European co-operation at all. That is true of the detainees. They made that completely plain to us when we were there. It is complete nonsense to compare them in any way with Mr. Nyerere. They are two completely different types of people.

Mr. Stonehouse: If the National Democratic Party is as racialistic as the hon. Member suggests on the basis of the inaccurate information provided for him in one of the briefs, no doubt, of the organisation which sponsored his visit, will he explain why there are about 100 European members of the National Democratic Party?

Mr. Russell: There are a large number of African members of the United Federal Party.
That brings me to the other subject which I want to mention. The hon. Member complained that there was intimidation of Africans by the Southern Rhodesian Government. There is intimidation of moderate Africans by African extremists, perhaps not so much in Southern Rhodesia as in Northern Rhodesia or Nyasaland, but it is there. I should like to know from my right hon. Friend what progress is being made in overcoming that intimidation, which in many ways is much more serious than the intimidation of which the hon. Member complains, which is a different matter altogether. My purpose was to intervene simply for a few minutes to refute the arguments made by the hon. Member about the detainees at Mirandellas. I hope that my right hon. Friend will not in any way press the Government to release them.

10.1 p.m.

Mr. H. A. Marquand: I shall refer later to what the hon. Member for Wembley, South (Mr. Russell) has just said. I do not propose

to do so at this moment because, to be brief, I have tried to arrange my remarks in a certain order. What I have to say about the hon. Member's remarks will come more appropriately later.
What was for most of us the beginning of the events which we are now discussing was the announcement in the newspapers on 8th February that, in the words used by The Times, agreement had been reached in Southern Rhodesia. Naturally, on reading an announcement of that kind, we were all delighted and, at the same time, surprised. We had hardly expected that in so brief a time agreement on the many momentous issues could be reached.
When we look at the White Paper, which is one of the most laconic documents of its kind ever to be presented to Parliament after the conclusion of a Constitutional Conference, we find that what is contained in the White Paper was agreed upon, if it was so agreed, within the space of eight days. It was not, perhaps, surprising that after a time, much to our regret, we began to find that our delight was not entirely merited and that our surprise was justified.
What has happened since has shown that the document now under discussion was arrived at after such a short conference and presented so quickly in such a brief document that it has led to a great deal of misunderstanding. I put it no higher than that. I still hope that in the end that misunderstanding will prove not to be outright disagreement, but that there has been misunderstanding as a result of this extremely rapid conference, including a number of people who, although they speak English, cannot always appreciate the nuance of phrases and the exact meaning of legal terms which go into documents like this, that the brevity of the conference has been regrettable and it might have been better, in the long run, had the conference lasted longer and made quite sure that every party to it thoroughly understood what was agreed to.
In the statement to which I have referred, The Times went on to say that Britain was ready to give up powers. The White Paper tells us, in paragraph 32, that
The Secretary of State for Commonwealth Relations accordingly informed the Conference


that he would be prepared to recommend the elimination of the powers retained by the United Kingdom Government
It goes on to say the conditions on which the right hon. Gentleman would be prepared to recommend the elimination of those powers. If he recommends their elimination, he has to do so to Parliament.
It is at this point that we come in. We have asked the right hon. Gentleman—and we are very grateful to him for coming here tonight—to try to clear up some of the misunderstandings, as there may be, about the exact meaning of various paragraphs in this document. Naturally, Parliament would want to know clearly what it is to do before it agrees to the elimination of any powers. In any case, I am sure that the right hon. Gentleman would not proceed to recommend the elimination of powers unless he was convinced that all concerned fully understood what was happening.
I am sure that the right hon. Gentleman wants to ensure that the proposals upon the basis of which he may eventually recommend the elimination of powers are thoroughly understood. I hope that he will realise that we have raised this short debate quite sincerely because we want to give him an opportunity to understand some of the misunderstandings in various minds and some of the difficulties that we in the House find in the document itself.
As my hon. Friend the Member for Dundee, East (Mr. G. M. Thomson) has already said, we rejoice in paragraph 34 of the White Paper, which records that
The Southern Rhodesia Government asked that the United Kingdom should initiate legislation to provide that, in future, Parliament at Westminster would not legislate for Southern Rhodesia, except at the request of the Government of Southern Rhodesia, in regard to any matter within the competence of the Legislative Assembly.
Yet the paragraph goes on to state that
The Secretary of State for Commonwealth Relations took note of this request without commitment.
We are very glad that there is no commitment and that it is clearly recognised in the paragraph without any doubt whatsoever that the United Kingdom Government retain their power to legislate for Southern Rhodesia.
I have raised this matter more than once in the House in the last two years when we have debated Southern Rhodesian questions. I have said before that I am convinced that what the then Mr. Lennox-Boyd was able to do for the Bahamas, the Secretary of State for Commonwealth Relations could now do for Southern Rhodesia if he wished. It is clear from this paragraph that Parliament in the United Kingdom still retains these powers and that the Secretary of State has given no commitment whatsoever to give up these powers. We welcome that.
In the existing legislation governing the degree of self-government which Southern Rhodesia has obtained—the letters patent—there is provision for the reservation for Her Majesty's pleasure of discriminatory Bills. All these powers are covered and explained in paragraphs 32 and 33 of the White Paper. Those paragraphs state that it was agreed that some of these powers to disallow discriminatory legislation and to exercise control over matters relating to the Native Department would be necessary only if there were to be in a new Constitution far Southern Rhodesia a Declaration of Rights and a Constitutional Council empowered to watch over the enforcement of that declaration and provisions for appeals to the Privy Council.
I would only ask the right hon. Gentleman one question about this. Is it intended, in drawing up this new Declaration of Rights, which is referred to only very briefly in paragraph 6 under headings, that there shall be entrenched in that declaration the right of habeas corpus? I am sure that all hon. Members would entirely agree that the right of habeas corpus is one of the major foundants of our liberties—the right of a subject if accused of an offence not to be held in prison for any undue time, but to be brought to trial.
I hate the provisions for preventive detention which have got into the constitutions of a good many countries. I hope that we shall have an assurance tonight that it is fully intended by those who have agreed to the White Paper that there shall be in that Declaration of Rights the equivalent of habeas corpus so that preventive detention for long periods of time shall not be allowed in


Southern Rhodesia if it attains this new Constitution.
Apart from that, the outline of the Declaration of Rights, not unreasonably. has to be associated with the paragraph defining the powers of the Constitutional Council, because the Constitutional Council is to be the watchdog over the Legislature, and is to examine any new Bill passed by the Legislative Assembly and report to the Assembly whether, in its opinion, the Bill was unfairly discriminatory or otherwise contravened the provisions of the Declaration of Rights.
It is not surprising that Africans, reading about these proposals for a Constitutional Conference, remember the sad experience of the African Affairs Board under the Federal Constitution. They are bound to remember the debates that went on in this House, the assurances that were given that the African Affairs Board would protect them from discriminatory legislation, and that the very first time the Board reported a particular piece of legislation as discriminatory it was over-ruled. They remember this, and they are right to remember it. They would be very foolish indeed if they did not, so it is very important to be sure how this Constitutional Council is to work.
It is stated that in regard to one of the most discriminatory provisions in Southern Rhodesian law—the Land Apportionment Act—it was agreed in principle that the powers of the United Kingdom Government in relation to these matters should be eliminated, provided that full and effective alternative safeguards could be devised.
My hon. Friend the Member for Wednesbury has already reminded the House of the provisions of the Native Reserves and Land Apportionment Act in Southern Rhodesia. It is well known that the system of land apportionment is one of the major grievances of Africans in Southern Rhodesia. It is known, as my hon. Friend has reminded us—he gave the figures, and I need not, therefore, repeat them—that the greater part of the land in the country is reserved for use by a small minority of the population. We are told that the Conference was not able to consider this

in the time available. This seems to support what I said at the beginning, that the time taken over all these far-reaching conclusions was so short that we wonder whether they were fully understood.
What, then, is in the right hon. Gentleman's mind about the necessary safeguards which would be required in relation to the Land Apportionment Act before the powers of the United Kingdom Government could be abdicated? What canditions must be satisfied before he will recommend that to Parliament? To retain in Southern Rhodesia after the establishment of a new Constitution a system of land apportionment in any way resembling the present system would surely make a declaration of human rights of very little value, for land apportionment as now practised in Southern Rhodesia enshrines the principle of segregation.
It is in Southern Rhodesia—and it is in South Africa—one of the major features of the system of apartheid which the right hon. Gentleman so eloquently decried last night. To segregate people to particular sections of land—to say that white people only can live in this section and black people only in that section—is the very embodiment of the principle of apartheid. Indeed, the right hon. Gentleman rejected that principle last night in very strong language with which we entirely agreed and which we were very glad to hear. So what modification of that system does he think will be necessary?
We are told that there is to be legislation shortly in Southern Rhodesia for modifying the system of land apportionment. I know that the right hon. Gentleman is not responsible for it, but he is well informed about these matters, and I wonder whether he can give us any indication of what shape that legislation will take. Before we agreed to the surrender of any powers we in this House should certainly want to be satisfied that there was a drastic modification in the existing system of land apportionment.
This is not the only qualification in relation to the powers of the Constitutional Council. Paragraph 15 definitely limits the powers of the Constitutional Council, because it says that the procedure would not apply to any laws or subsidiary legislation in force before the


enaotment of the new Constitution. All the council could do would be to draw the attention of the Legislative Assembly to any such laws which, in the opinion of the council, were inconsistent with the provisions of the Declaration of Rights.
That surely means that if the procedure does not apply to legislation in force before the Constitution is established, it would not apply to the Land Apportionment Act or, as my hon. Friend has said, the Law and Order Maintenance Act and the Vagrancy Act. The Law and Order Maintenance Act was so discriminatory, so reactionary, and moved so far in the direction of the South African system of apartheid, preventive detention and all the rest of it, that the Chief Justice resigned in protest. Are these Acts to remain unchanged because they are already in existence? If so, the proposals for a Declaration of Rights become a mockery, and Africans could not reasonably be expected to agree to them. Much more than an ability on the part of the Constitutional Council to draw attention to these would be required if they can be asked to accept them.
I now turn to the remarks of the hon. Member for Wembley, South (Mr. Russell). Does he agree that the men whom he describes are entitled to the ordinary rules of British justice, whatever he thinks of their politics, however extreme he thinks they are and however unjustified he thinks are some of the things which they said? Surely they are entitled to be tried once they have been put into prison. Surely they are entitled to the elementary rights which we have now enjoyed in this country for 300 years, to be brought before a court accused of an offence and put on public trial. I should like to know whether in future, under the Declaration of Rights in the new Constitution conceived of in this White Paper, Mr. Mawama, for example. could be brought to trial or, if he were not, could appeal to the Privy Council as provided for in the draft outlines of a Declaration of Rights.
The Africans, naturally, draw attention to the fact that the Constitutional Council could, according to paragraph 11 of the White Paper, be over-ruled by the Legislature, despite any protest that it might make, either immediately by a two-thirds majority or, after a delay of

six months, by a simple majority. The Africans link this provision of power for the Legislature to over-rule the Constitutional Council, if it sees fit, with the franchise provisions.
The Africans say that these provisions would be all very well if they had a chance of obtaining a sufficient number of seats in the Legislature, but that if the Legislature is to consist, as it might well consist under this Constitution, of 45 Europeans and 15 Africans, then it would be possible—I am not claiming that they say that this is what will happen—for the 45 Europeans to outvote the 15 Africans and impose some sort of discriminatory legislation in favour of whites and against blacks, despite the fact that the Constitutional Council had recommended that that legislation was discriminatory and should not be allowed.
The right hon. Gentleman the Secretary of State for Commonwealth Relations has, quite fairly, acknowledged that the Africans have not got all they want in the franchise proposals, and he recognises their natural desire and their freedom to campaign for something better. Mr. Nkomo and his colleagues, in negotiating this agreement, have succeeded in getting their foot in the door, and it may well be that after further discussions and assurances, and perhaps after what we hope will be a statement by the right hon. Gentleman tonight, they will be more inclined to accept this agreement as an interim measure, campaigning in the meanwhile for a better franchise. But they do need further enlightenment about the Constitution of the council before they are likely to accept that provision.
It is suggested in the White Paper that the Constitution of the Constitutional Council remains to be worked out. Paragraph 9 says:
The Council would comprise about twelve persons, chosen by an Electoral College, in accordance with procedure which has still to be worked out.
That is very vague and, once again, suggests perhaps that this Conference was too hasty.

The Secretary of State for Commonwealth Relations (Mr. Duncan Sandys): indicated dissent.

Mr. Marquand: Well, perhaps they could have stayed a few days longer to


thrash out this important question of how the Council is to be composed.
In the circumstances, it is not surprising that the National Democratic Party has declared certain conditions before it is willing to take part in the referendum. I hope that the right hon. Gentleman will pay close attention to what my hon. Friend the Member for Wednesbury (Mr. Stonehouse) said about the character of the referendum, and will give us a better idea than we have now about what sort of referendum it is to be, and what is to be the participation of the Africans in deciding on the very important constitutional proposals which may affect the future of their country for a very long time.
The conditions which they have mentioned are, first, that the Federal Government should desist from interference in the Northern Rhodesian talks. I hope and trust that the recent statements by our own Prime Minister will reassure them on that. The right hon. Gentleman said last night—not for the first time, and he said it categorically—that the Federal Government is not expected to make any constitutional proposals for Northern Rhodesia, but that the United Federal Party within Northern Rhodesia is entitled to do so and can do so, but within the framework of what has already been laid down by the Secretary of State for the Colonies. That is a not unacceptable proposition and one which, if properly explained to the Africans, they might well accept.
Their second condition is a substantial improvement in the apportionment of land. I have already dealt with that. They are right to draw attention to the need for some sort of undertaking about that to be given quickly. Their third condition is concerned with the make-up of the Constitutional Council. I have already said that they are entitled quickly to have better information about how that council is to be chosen. Their last condition is the release of detainees and permission for meetings.
I have already said that I hope that in the new Constitution there will be genuine provision for human rights and for habeas corpus and I hope that, recognising that that is bound to happen and ought to be embodied in any civilised Constitution, the Southern Rhodesian

Government will be prepared to make a gesture which will satisfy the African leaders, at any rate for the time being, and induce them to go further with the proposals.
We have a great deal of explanation to give to Africans, if possible in their own languages, so that they can fully understand what it is that they are being asked to agree to and are not asked to buy a pig in a poke.

10.27 p.m.

The Secretary of State for Commonwealth Relations (Mr. Duncan Sandys): I do not think that anybody is being asked to buy a pig in a poke. The arrangements which are set out in the White Paper have been carefully thought out and thoroughly discussed with all concerned. I cannot agree with the right hon. Member for Middlesbrough, East (Mr. Marquand) when he says that the Conference was too hasty, or that the decisions were rushed and that the African representatives could not understand what they were agreeing to because of their imperfect knowledge of English and the implications of the law.
Personally, I have much admired their remarkable mastery of the English language. As for legal implications, one member of the National Democratic Party delegation was Mr. Chitepo, who is an outstanding barrister in Southern Rhodesia. I would be the last to allow anything to go through if I did not think that everybody understood exactly what was being agreed.
I emphasise that the proceedings in this Conference, which ended with the issue of the White Paper, were of the utmost significance for the constitutional history of Southern Rhodesia. For the first time in the history of that Colony members of all races met together to consider the future constitution of their country. It was a quite remarkable event. In a conference of this kind it was naturally not to be expected that everybody, or, for that matter, anybody, would be wholly satisfied. There was, however, a wide area of agreement, far wider than most people thought possible, certainly far wider than I thought possible at the start.
The new Constitution will make some far-reaching changes. Though the Africans may have asked for more, and


they certainly did, I think that it must be pointed out that at present Africans have no representation in the Parliament of Southern Rhodesia and most people thought a month or two ago that they had very little prospect of obtaining any. The new Constitution will probably give them straight away nearly one-quarter of the seats in the new legislature. For the first time the Southern Rhodesia Constitution will enshrine a Declaration of Rights and other safeguards to protect liberty and prevent discrimination.
Furthermore, the people of Southern Rhodesia will now be given the power to amend their own Constitution, and I believe that that in itself is quite important. It is far better that a Constitution should be amended, provided there are due safeguards, by the processes of political pressures and the electoral system, than always by reference to an outside body, such as the Parliament here at Westminster.
As I have already explained, nothing we can do, no assurance I can give, not even an Act of Parliament here, can remove the inalienable power of this Parliament to legislate. At the same time, provision is made to ensure that basic safeguards, including, of course, the Declaration of Rights, may not be amended without the separate agreement by referendum of all the main racial communities. So we can be quite sure that no changes will be made in the Constitution which are to the disadvantage of any of the main racial communities. Does the right hon. Gentleman want to interrupt?

Mr. Marquand: I was only saying to my right hon. Friend that I hoped that the Secretary of State would put flesh on the bones of the skeleton he has presented.

Mr. Sandys: I do not know what skeleton the right hon. Gentleman is referring to.
The right hon. Gentleman asked about the Land Apportionment Act. We all agree that that does represent a substantial measure of discrimination, though it does also contain certain safeguards for the Africans in respect of land. All I can say at the moment is that, as I think the right hon. Gentleman knows, a Select Committee of the Southern Rhodesian

Legislative Assembly reported a few months ago on this matter. The Committee recommended sweeping changes in the arrangements for land. The Southern Rhodesian Government are, I understand, considering this Report. I think that we all recognise that the problem is a complex one and does not lend itself to an overnight solution. Even though decisions may be taken, it is quite clear that it will take some time to work them out in orderly fashion.
Amendment of the Land Apportionment Act is a matter for the initiative of the Government of Southern Rhodesia, but from the discussions I have had there I have every reason for confidence that they intend to tackle this problem. It is, of course, basic to so many of the other matters which have been discussed in this debate.
The right hon. Gentleman spoke about the Constitutional Council and criticised the arrangements proposed in the White Paper on the ground that that council can be over-ruled by the Legislature. That is true. The function of the Constitutional Council is to examine legislation and then to report upon it. It is concerned not only with racial discrimination but with all matters contained in the Declaration of Rights. Its job is to look at legislation and to report, if it thinks necessary, to the Legislature that a particular Bill conflicts with the Declaration of Rights and to recommend that the Bill either should not be passed or should be repealed, as the case may be.
It is true that under paragraph 11 of the White Paper the Legislature need not accept the Constitutional Council's recommendation; it is given power, either by a two-thirds majority immediately, or by a simple majority after a period of months, to confirm the Bill and to pass it into law. The reason for that is that we thought—incidentally, the African members of the Conference were very strong on this—that it was not a good thing to set up the Constitutional Council as a rival to the courts.
The real safeguard which we are providing for the observation of human rights is contained not here, but in paragraph 7, which says that any law
passed after the enactment of the new Constitution, which contravened the provisions of the Declaration of Rights, should be invalid.


It is the job of the courts to decide whether a law is valid or invalid. The Constitutional Council is there primarily to help the Legislature not to pass laws which will subsequently be declared to be invalid.
However, this provides a very important safeguard. In cases where the Legislature confirms a law which the Constitutional Council has said conflicts with the Declaration of Rights, paragraph 14, provides that
The Constitutional Council should be entitled to assist in bringing a suitable case before the Courts, for the purpose of testing the validity of any legislation which had been passed or retained notwithstanding the adverse opinion of the Constitutional Council and the Council should be entitled to defray any necessary legal expenses.
We have thus made it clear that where the Legislature confirms a law which the Constitutional Council has declared to be contrary to the Declaration of Rights, we do not leave it to chance or to some citizen who perhaps has not the means to bring an effective case before the courts; we empower the Constitutional Council to initiate proceedings, to choose a suitable test case and to bring it before the courts and so test the validity of the law. I think that it will be found to be better to rely on the courts to decide whether something conflicts with the Constitution than to set up a separate body, which would essentially come into conflict with the courts of law. I hope that on further reflection the right hon. Gentleman will agree that perhaps that is the best way to handle a matter of this kind.
The hon. Member for Dundee, East (Mr. G. M. Thomson) did not agree that the Constitutional Council should be concerned with ensuring only that laws were not unfairly discriminatory. He considered that all laws which were discriminatory ought to be invalid, and asked whether only laws which were flagrantly discriminatory would be barred. Again, I would ask him to think carefully on this matter. We mean what we say—that laws should not be unfairly discriminatory. That does not mean to say that it is not sometimes necessary for laws to be discriminatory. There are a number of discriminatory laws which it is necessary to have on the

Statute Book of Southern Rhodesia. So long as the Africans have not got full political rights it is essential that certain things should be safeguarded, such as land rights and native land reserves. They are discriminatory in favour of the Africans. A certain discrimination is unavoidable and necessary. I am sure that if we discussed all these matters with the Africans they would be the first to say that they did not want all these laws which are discriminatory, but not unfairly so, to be swept away. In fact, they have made that clear. The hon. Member will realise what lies behind that phrase.
The hon. Member for Dundee, East, the hon. Member for Wednesbury (Mr. Stonehouse) and the right hon. Member for Middlesbrough, East spoke about the fact that the new Constitution will not make invalid existing laws which are discriminatory or which conflict with the Declaration of Rights. That is a very important point, and I am glad that it has been raised. The Constitutional Council will have the power to draw the attention of the Legislative Assembly to any existing laws—that is to say, laws passed before the new Constitution comes into force—which in the opinion of the Constitutional Council are inconsistent with the provisions of the Declaration of Rights and should be amended.
But the counts will not have the right to declare invalid existing laws which conflict with the Declaration of Rights. That has arisen in this way: the Constitutional Council and the Declaration of Rights are designed to provide safeguards in substitution for the safeguards at present provided by the British Government's reserve powers. Our present reserve powers, apart from our inalienable power of legislation, do not enable the British Government to annul or amend any existing legislation once it has been in force for one year. It will be seen that the new constitutional safeguards are at least equally as effective as, and in my view much more effective than, the obsolescent powers they will replace. Another important point is that the new arrangements are designed to provide protection not only for Africans but for people of all races, and this may be of significance in the future.
The right hon. Member for Middlesbrough, East said that Africans could not be expected to agree to a Declaration of Rights which does not apply retrospectively to existing legislation. All I would say is that that is not the view of prominent Africans who took part in this discussion. I should like to read an extract from a speech made only a few days ago by the Rev. N. Sithole, a leading official of the National Democratic Party, who took a different view. He warmly welcomed the Declaration of Rights. I have here an extract from a report in a Southern Rhodesian newspaper, which says:
The Rev. N. Sithole, a leading National Democratic Party official, told an enthusiastic crowd of several hundred Europeans and Africans in Bulawayo yesterday that the doctrine of white supremacy and the colour bar would be swept away when the Colony's constitution entrenched a declaration of rights.
He went on to deal precisely with the point raised by the right hon. Gentleman and said that it might not be retrospective to laws already in force, but that the political pressure it would create would help to resolve this. I believe it is not an insignificant power which we give to the Constitutional Council, the power to draw attention to the existing laws which conflict with the Declaration of Rights. We must assume that there will be a general movement of thought in the territory in the direction we want, and that, where laws are unfairly discriminatory, although they have been passed before the new Constitution, public opinion and political pressure will more and more result in their removal or amendment.
The right hon Gentleman asked whether the Declaration of Rights would include the principle of habeas corpus, by which, I assume, he means that there would be no imprisonment except in accordance with due process of law. I can assure him that I do not think that any Declaration of Rights which did not contain that broad principle would be complete and he may be assured that that matter will be dealt with.

Mr. G. M. Thomson: On that very important point, will the right hon. Gentleman look at paragraph (d) in the points on the Declaration of Rights in the White Paper, where it says:
While the right of the individual should be protected, the State should nevertheless be

enabled to assume and exercise whatever powers may be necessary in peace and war for the purpose of"—
among other things, law and order. Unless the Secretary of State is very careful to implement the assurances which he has given to the House, and for which we are grateful, would not that justify the presence of the enactment my hon. Friend though so deplorable?

Mr. Sandys: That is a difficulty in any Declaration of Rights. One comes across it everywhere, if the hon. Gentleman looks at any Declaration of Rights, whether of the United Nations or of any of the various countries where there is a new Constitution. In the end, there always has to be some provision giving the State, which has the ultimate responsibility for the safety and well-being of the people, an ultimate power to do what is necessary to discharge its obligations. In this country we have that power. We declare a state of emergency when there is to be a railway strike, or something of that kind. All sorts of emergencies have to be dealt with from time to time and, in those circumstances, the ordinary law does not prevail. I think that it is inevitable. We were aware of this and it was fully discussed at the Conference.
I think that it is inescapable. One must leave something to the pressure of public opinion. But it would be a gross breach of the spirit of the constitution if emergency legislation were allowed to stand as part of the permanent law of the land.
The hon. Member for Wednesbury referred to my speech yesterday and said that I was not correct in claiming that, unlike South Africa, Southern Rhodesia was endeavouring to eliminate discrimination. I do not think that his was an altogether fair statement. He may, of course, criticise the pace of progress, but he cannot really dispute that things are definitely moving in the right direction.
Lord Monckton, in his Report, lists a number of the steps which have been taken to remove discriminatory practices of various kinds. It will be seen that, on pages 75 and 76, the Report sums it up in this way:
While these are only beginnings, they do mark a trend which is accelerating and is moving in precisely the opposite direction to the trend of present Government policy in the Union of South Africa.


I believe that that is correct, and I am sure that the hon. Member would not wish to compare the racial policies in Southern Rhodesia with the racial policies in South Africa. That would be extremely unfair and extremely misleading.
The right hon. Member for Middlesbrough, East, the hon. Member for Wednesbury and others have referred to the fact that the National Democratic Party, particularly Mr. Nkomo, have made statements to the effect that they did not agree to anything, and that it was quite misleading on my part to suggest that they agreed to the Report of the Conference. That really is not so. I have allowed this to go for a long time, but I must answer that point and dispose of it. These are the points I should like to make in explanation of this situation.
First, let me explain that this Report was very fully discussed. The most important and difficult passages in it, the ones dealing with franchise and representation, were discussed by the Conference as a whole and in groups for a number of days. In fact, I suspended the Conference for about two days in order to have discussions with the various groups. The particular paragraph which gives rise to this difficulty, and which has been particularly repudiated by the National Democratic Party, is paragraph 18, of which these are the operative words:
Nevertheless, while maintaining their respective positions, all groups (with the exception of the representatives of the Dominion Party) consider that the scheme outlined below should be introduced.
That is the franchise and representation scheme. Since so much has been said, and it has been suggested that I have been guilty of bad faith in this matter, I feel that I am entitled to say quite clearly how this came about and how these words came to be introduced. Those words were words chosen by the representatives of the National Democratic Party themselves. It was they who drafted that particular sentence. I hope that I shall not be guilty of breach of confidence, but when one is accused of bad faith I think that one must tell the whole story. In the draft which they proposed and said they were prepared to agree to, there were not only these

words, but a further phrase at the end.
They added the words:
and that it"—
That is, the scheme—
should be given a fair trial.
They considered that
the scheme outlined below should be introduced and that it should be given a fair trial.
Those were the words which, several days before the end of the Conference, they said they were prepared to accept. When it came to the end, I said, "I do not want to make it too difficult for you. I know that you are going to have difficulties. I do not think that it is necessary to put those last words in.
'and that it should be given a fair trial.'
I am quite satisfied if you say that you consider the scheme should be introduced."
That is how it happened. I must complain about the accusations of bad faith and the suggestion that I have cheated them or been too smart by half. That is not so. These difficult and critical passages were the result of prolonged negotiation between the various groups. I had to see them separately and together and to go backwards and forwards. Words were altered and aspects of the franchise proposals were altered to try to suit one side or the other, and eventually we got this solution.
Of course they were not satisfied. The National Democratic Party made it clear from the beginning that it wanted "one man one vote." Nobody has ever questioned that. All it did agree to was that it would be a good thing, not having been able to get what it wanted, for this scheme to be introduced.
Mr. Nkomo, in his speech made almost immediately afterwards, welcomed certain parts, at any rate, of the Report, and claimed that they would be a stepping-stone and a half-way house to the ultimate goal. At the same time, he said things that suggested that he was repudiating the passage on franchise and representation.
I think I can prove effectively that there was agreement. I am not complaining about any change of mind there may have been afterwards. People are entitled to change their minds, especially when pressure is brought to bear on them, as I think there undoubtedly was here, by their followers.
When I saw his statement a few days after the Conference, which suggested some doubts as to whether Mr. Nkomo was accepting the Report of the Conference, I asked our British High Commissioner to find out what the position was. He received the following letter from Mr. Silundika, Secretary-General of the National Democratic Party—because I asked them to clarify the position:
Dear High Commissioner,
In view of the false impression which seems to have been created in the United Kingdom Press by Mr. Nkomo's statement today I should be grateful if you would inform Mr. Duncan Sandys, as Chairman of the Constitutional Conference, that he may issue the attached statement to the Press on behalf of the N.D.P.
Yours sincerely,
T. G. Silundika.
This is the statement:
For the avoidance of misunderstanding the National Democratic Party wish to make it clear that the statement that was made by the President, Mr. Nkomo, at his press conference today does not imply any repudiation of the report of the conclusions of the Constitutional Conference. He only wished to correct the impression conveyed in the local press regarding the N.D.P. attitude to the franchise and representation proposals outlined in the report, and to make it clear, as stated in paragraph 18 of the report, that the N.D.P. maintains its position and intends to continue the campaign for its objective of 'one man one vote'.
Nobody has ever suggested that the party was not entitled to maintain its position and to campaign for what it has always said it wanted. But the important thing is that this statement makes it quite clear that agreement was reached, whatever may have happened afterwards.
What did happen afterwards was made very clear by a speech made by Mr. Nkomo himself. He said:
A leader is he who expresses the wishes of his followers …
He went on to say:
No sane leader can disregard the voice of his people and supporters.
And he then went on to explain:
I am afraid to say that my followers are … enraged by the thought that the delegation"—
that is, the N.D.P. delegation—
accepted what is virtually a surrender …
That is quite clear.
If any further doubt is still cast upon this, only just the other day Mr. Mawema, founder of the National Democratic Party was reported in this way in a newspaper out there:
Mawema said it was not true that Nkomo did not originally accept the constitutional proposals, but Nkomo was now expressing the view of the rank-and-file of the party in 'damning the agreement'.
I hope that I have said enough to explain the position. I ask the House to forgive me for explaining it at length, but I thought it right to clear the matter up.
I will not detain the House further. I hope I have dealt with as many points as possible.
I believe that this Constitution, though it does not satisfy everybody, or, for that matter, anybody, completely, does represent a major advance in the direction we all want to follow, and I think that it does credit to the representatives of both races who came together to work it out.

ADMIRALTY UNDERWATER WEAPONS ESTABLISHMENT, PORTLAND (ESPIONAGE)

11.0 p.m.

Mr. George Wigg: In seeking to raise at this late hour some of the points which arise in connection with the espionage trial concluded yesterday, I want to make it clear to the House that, first of all, I gave notice to the First Lord of the Admiralty because, of course, he is directly responsible inasmuch as the Underwater Weapons Establishment at Portland is borne on his Vote, and, secondly, I gave notice to the Minister of Defence, because the other fighting Services are involved, and, through his private office, to the Prime Minister who, of course, is responsible for the Secret Service.
I realise very well that, although the trial is concluded, and even though I may be within the rules of the House, one has a direct responsibility here to remember that further proceedings might arise. I have consulted Erskine May, and I find on page 457, under the heading "Matters pending Judicial Decision", that the situation is governed by a Ruling given by Mr. Speaker Clifton Brown, recorded in HANSARD, Vol. 420, column 303, when he said that a matter decided by a court but open to appeal is not sub judice unless notice of appeal has been given.
Anxious to comply not only with the letter of that Ruling but also with the spirit, I got in touch with the Registrar of Appeals at the Court of Criminal Appeal this morning, and he informed me that up to that time no notice of appeal had been given. As I told the House in a supplementary question I put this afternoon, I wished to be absolutely fair on the point. To be quite certain what the facts were, at 4.30 p.m., the normal hour for the closing of the office of the Registrar, I telephoned again and I was informed that no notice of appeal had been given. I am thus in order in referring to matters which took place during the trial, but, of course, it is clear that it is more than likely that there will be an appeal, and I ought, therefore, to be very mindful of the possibility that further proceedings may come before the courts. I have done

my best, and I thought it right to tell the House of what I had done in this connection.
Before the Prime Minister's statement, it was my intention to deal not so much with matters connected with the trial itself, though I shall have one or two observations to make about that, but to ask the Government to set up an inquiry. As I say, my first notice was to the First Lord of the Admiralty because he is concerned with what has happened, but I am quite certain that Portland is now a proscribed area for the Russian intelligence service. It is extremely unlikely that any more Russian agents will be caught in that area, at least for some time to come. Nevertheless, it seems to me that whatever had gone wrong there—and something had gone wrong—may well be going wrong in other places.
On my visits to the Old Bailey, as I listened to the story there unfolded—[Laughter.]—Yes, I went to listen. I thought it important to go and acquaint myself with what had happened. What struck me was the tremendous resources which scientists and technicians are applying now to the business of gathering information. The old "cloak and dagger" stories which are fed to the public by the B.B.C. or the more lurid forms of writing are all out of date. Vast sums are devoted to the gathering and passing of information.
Whilst I should like to congratulate the police and the intelligence services on doing something that the Americans have failed to do—we caught a couple of their spies, two who got through their net—I certainly do not believe that the antiquarian book-selling business carried on at Ruislip was carried on merely to cover the activities of two humble and not very intelligent people like Mr. Houghton and Miss Gee. I think there is a lot more going on than that.
It was never my intention to probe this case too far or to seek in any way to hamper the activities of the authorities. I am mindful of what was wisely written in paragraph 28 of Command 9577, the "Report concerning the disappearance of two former Foreign Office Officials." The last half of that paragraph states:
Counter-espionage equally depends for its success upon the maximum secrecy of its methods. Nor is it desirable at any moment to let the other side know how much has been discovered or guess at what means have been


used to discover it. Nor should they be allowed to know all the steps that have been taken to improve security. These considerations still apply and must be the basic criterion for judging what should or should not he published.
Those are words of wisdom, and it is no part of what I am saying tonight to do anything to hamper the Government or those responsible in putting matters right.
On the many occasions when I have wearied the House with my views on defence, there has been one constant theme. I have always thought that this subject transcends political considerations. I have always held that view. I have advocated it even when I have bored people to distraction. That has been the theme, and I adhere to it tonight.
One must recognise that this is a sad story. The Lord Chief Justice described it as a disgraceful one. In some ways, it is humiliating. Having said that, however, we might be conscious of something on the credit side. The first item I have already mentioned. Two American spies who had got away have been caught here. One wishes that they had been caught sooner, but there it is. Another factor to be conscious about—I was conscious of it at the Old Bailey—was the atmosphere of absolute justice and impartiality. Although I thought that Mr. Lonsdale was a Russian intelligence officer, I thought in some ways that perhaps he had served in the armed forces. Perhaps I may weary the House and explain why I thought so.
Right at the last moment, Mr. Lonsdale asked to make a statement. He got up and said that he took full responsibility for anything that had happened. Those were the words of a Regular officer, not a politician. I thought that the traditions of the British Army had in some way entered into the training of Russian intelligence officers. It is certainly to our national credit that the trial should have been conducted with the utmost fairness and every opportunity given to the accused to make their case.
I hope that the British Press, when freed from the inhibitions of contempt of court, will continue to do its best, but I am not absolutely sure because of this morning's edition of the Daily Mail. This brings me to the first point to which I want the Civil Lord to reply. There are statements in that newspaper ascribed to

a Captain George Symonds, a naval officer who, I understand, is on the Active List. He made comments upon how much information the Russians may have obtained and other comments. I cannot believe that a serving officer ever made that statement. If Captain Symonds did make it, I suggest that it should be considered whether he has not laid himself open to disciplinary remedies. If he did not say it, I hope that the Civil Lord will take the earliest possible opportunity of denying it.
Other statements are ascribed to other officers, one of whom, a naval attache, may or may not be on the Active List, and the other of whom is the security officer at Portland. Because of the nature of all of these statements, I doubt whether they were ever made.
I hope very much that we shall hear from the Civil Lord something about this. It would also seem, if the Daily Mail report is correct, that the security in the First Lord's private office needs to be looked at, because there are statements there concerning Vice-Admiral Sir Geoffrey Thistleton-Smith. I should like to hear the Civil Lord's comments on them.
I have said what I had intended to do in raising this matter, but this afternoon we had a statement from the Prime Minister which, needless to say, caused me to reflect on what I had to say. I must say that I thought that it was one of the smartest operations I have listened to for a long time. I am always lost in admiration of the Prime Minister. He is the smartest political operator I have ever listened to. [HON. MEMBERS: "Oh."] It is all right as long as one does not check what he said on a previous occasion, but I have had the opportunity. We listened to the right hon. Gentleman this afternoon and he absolutely spell-bound both sides of the House.
The right hon. Gentleman said three things. First, he was going to institute an inquiry probably under a civil judge of great distinction, who would see whether the procedures advocated by the Privy Councillors had been applied. Then he said—he hoped with the support of the Opposition—that if it was found there were weaknesses about it he would remedy them. Then that was not quite enough. He appealed to the ghost of Edmund Burke. He had to bring


in civil liberties and the like. But when one added the three things, what did one notice? One looked behind the Speaker's Chair and saw the Prime Minister saying "Ta-ta" because he was off to the Bahamas. He was away and Out of it. [HON. MEMBERS: "Oh"].
If hon. Members think that I am unfair, let us see what the Prime Minister said on 7th November, 1955. The right hon. Gentleman then said:
When what is known as the Maclean and Burgess case was entering its final phase, with the findings of the Australian Royal Commission and the publication of the White Paper, I made it clear that full ministerial responsibility must be taken by those Ministers, past and present, who presided over or were connected with the Foreign Office during all this period. This was not a mere act of quixotism or chivalry; it is a plain constitutional truth. It will be a sorry day when we try to elevate something called the Foreign Office or the Treasury or any other Department of State into a separate entity enjoying a kind of life, responsibility and power of its own, not controlled by Ministers and not subject to full Parliamentary authority.
Ministers, and Ministers alone, must bear the responsibility for what goes wrong. After all, they are not slow to take credit for anything that goes right."—[OFFICIAL REPORT, 7th November, 1955; Vol. 545, c. 1484.]
Having said that, I should have thought that this afternoon the Prime Minister would have taken the full responsibility, because he is the head of the Civil Service.
But that did not happen. The right hon. Gentleman talked about setting up an inquiry. He puts, as it were, by implication, the blame in part at least on any weaknesses that may be found in the recommendations of the Committee of Privy Councillors. When one looks at the "Statement on the Findings of the Conference of Privy Councillors on Security" one does not need to go far to see what the weaknesses are. Paragraph 4 of that White Paper states:
The Conference point out that, whereas once the main risk to be guarded against was espionage by foreign Powers carried out by professional agents, today the chief risks are presented by Communists …
and then it goes on to talk about the dangers of political espionage undertaken for political reasons.
One of the interesting features about this recent case is that when one listens to it the only question of a political allegiance that came out was in respect of Miss Gee, who said that she had no strong political views but if she had

voted, she would vote for the Liberal Party. [Interruption.] I am sorry; I was looking round for the Liberal Party. It seems, for the time being at least, to have lost a supporter.
What needs to be pointed out is that the mood of 1955 is shown to be completely out of joint with what happened in 1961. Therefore, if for no other reason, the Prime Minister, if he had looked at what he had said in 1955 and looked at what that Report said, would have reached the conclusion that he did not need an inquiry, which he announced to the public, to bear some of the responsibility, for he would, in fact, take the decisions himself.
The third point of the Prime Minister's alibi was the question of the liberty of the subject. Here again, I found it of extreme interest to look at the latter part of an excellent speech that he made on 7th November, 1955, on the question of positive and negative vetting, which he would have the House believe is a matter of very great concern and must be regarded very carefully because of its infringement on the liberty of the subject.
I would remind the House of what the Prime Minister said on that subject. He told the House that positive vetting was introduced in 1952 in the Foreign Office. He went on to say:
The positive vetting procedure is not confined to the Foreign Service. It is now operated in all Government Departments having access to classified material. …"—[OFFICIAL REPORT, 7th November, 1955; Vol. 545, c. 1499–1500.]
What I would think, in all charity, is that the Prime Minister has been so busy getting ready for his West Indian trip that he had not the time, with the care that he usually takes, to acquaint himself with what had been said on previous occasions.
I think the wisest approach to this problem is that taken by my right hon. Friend the Leader of the Opposition in the Crabb debate in May, 1956, in column 1758 of the OFFICIAL REPORT. He laid down four conditions which needed to be satisfied. He said first, that the operations of these services—he was talking about the Secret Service—are ultimately and effectively controlled by Ministers or by a Minister; secondly, that their operations are


secret; thirdly, that they are carried out in such a way as not to embarrass our international relations; and, fourthly, he was concerned with making the obvious point that they should be concerned with efficiency. He argued that in the Crabb case none of these conditions are satisfied. I think that some of them certainly were not satisfied at Portland. I think that, here again, there is something that has gone seriously wrong.
Perhaps I might suggest one of the reasons as it struck me. Listening to the evidence, it seems to me that one of what I regard as the habits of the upper middle class in this country has spread to the security services; that is to say, they are wedded to the long week-end or the five-day week. What went wrong here was that Miss Gee and Mr. Houghton became aware that they could take documents away on Friday and bring them up to London to be photographed or shown to Mr. Lonsdale, and then as long as they were back again on Monday morning, it was all right. Nobody ever thought of having a check over the weekend, presumably because it would involve the breaking of long-established habits or the payment of overtime.
In all this we ought to remember our own responsibility. If, indeed, Ministers are responsible, if one makes the point that the Prime Minister is head of the Secret Service, I would remind the House that £60 million has been voted over the last ten years under that heading alone. There are also fairly substantial additional sums which are hidden away in the Service Estimates. It is altogether a fairly considerable sum of money. I readily agree that the nature of this work must be secret, and we certainly cannot ask the Prime Minister or any other Minister to come here and give an account of what takes place, but we have a right to be assured that these procedures are constantly under review and that the Government do not wait for a calamitous case like this before being brought face to face with the facts.
I want from the Civil Lord an assurance that the security of all branches of the Armed Forces will be reviewed, not with a view to shutting the stable doors when all the horses are at Aintree, but

with a consciousness of the enormous development of espionage techniques. It is no use having a Committee of Privy Councillors in 1955 and praying that Committee in one's defence six years later, because techniques may have altered to such an enormous extent that the procedures adopted even six months ago may be hopelessly out of date.
I want now to move to another aspect, in which every Member of this House bears a responsibility. When the House debated the Crabb case there was a Division, and it is interesting to note—I do not say this in a carping spirit—in view of the Labour Party's recent controversies, that that Division took place on a Service Estimate. In that debate, Sir Anthony Eden made another important point which would have appealed to my hon. Friend the Member for South Ayrshire (Mr. Emrys Hughes) had he been here tonight. Sir Anthony said:
A classic example was the atomic bomb, where the whole expenditure—£100 million—was concealed in the Estimates for a number of years."—{OFFICIAL REPORT, 14th May, 1956; Vol. 552, c. 1761.]
Although a number of my hon. Friends will not agree with this, because they are conditioned in their thinking about the Estimates by what happened before the war, it is clear that the Estimates as presented can contain things they never contained before the war.
While I think that we should lay the responsibility for what happened where it belongs—fairly and squarely on the shoulders of the Prime Minister and the Service Ministers—I recognise that I have a responsibility, as a Member of this House, to attend Estimates debates and to scrutinise the Estimates. The procedures this year were very nearly disgraceful. Let us take, for instance, the Naval Estimates.
I was naturally aware that the trial was going on, but there was the difficulty of remaining in order in raising the subject, in view of the Ruling I have referred to. But right at the end, came Vote 11, which covered "Miscellaneous Services". We had a major contribution from our Front Bench, and it is my submission that every single word of it was out of order. I realise that that is a reflection on the Chair, and that I must be careful, but that speech concerned the vital matter of the flying of


the White Ensign by members of the Royal Yacht Club. I said afterwards:
I am very interested in the point raised by my hon. and learned Friend the Member for Northampton (Mr. Paget). I ask the Government to bear in mind what I am going to say, for consideration in future years. I do not know how the recent discussion has been in order, but it obviously has been in order, otherwise the Chair would not have permitted it. It is odd that we can have an erudite and sophisticated discussion on the Royal Yacht Squadron, but cannot have any discussion on Naval Intelligence and the expenditure of money on it. Naval Intelligence is very important. We can spend ten minutes or a quarter of an hour discussing the flag flown by the Royal Yacht Squadron, but cannot devote a moment of time to discuss an important subject affecting the security of the country."—[OFFICIAL REPORT. 14th March, 1961; Vol. 636, c. 1301.]
That episode illustrated the extent to which our values have been out of focus, for we were not allowed to discuss Naval Intelligence, which was in Vote 12. We did not do so because the Government did not put it down, and the Opposition did not choose to ask for it. I advocate, as I have advocated before—and I am sure that hon. Members in all parts of the House will support me in this—that, with due regard for the public weal and security, the Government have to find some method whereby these Estimates can be scrutinised by those who are interested in them.
In Committee on the Estimates—again I use the word "disgraceful"—there were times when there were not half-a-dozen people in the Chamber, and yet we were discussing the expenditure of thousands of pounds of public money. Over the past few years, in any branch of defence—the supply of aircraft at Suez, the supply of tank-landing ships at Suez, the supply of anti-tank and anti-aircraft guns at Suez, aircraft going into the Lebanon, transport aircraft today, the supply of equipment in Germany—when the curtain is lifted we find deficiencies and weaknesses.
It is all very well to blame that on the Executive, but the Service Ministries become ever more complicated and even the most energetic Minister cannot be at it all the time. It is the job of the House of Commons and the Estimates Committee to direct attention to the weaknesses and to help Ministers to do the job for which they are appointed—that of looking after the defences of the country.
That is why I have raised this matter tonight. I do not want to make any difficulties for the Prime Minister in his tackling of a painful and difficult task, but it has got to be tackled and tackled with vigour and with integrity, and Ministers must not run away from their responsibilities. I was "larking" with the Prime Minister, but that is a temptation, because he is a smart operator and he cut off and thought that he had got away with it and that his public relations officers would see that he was all right with the House and the country.

Sir Lionel Heald: Very poor stuff.

Mr. Wigg: I am sorry that the right hon. and learned Gentleman thinks that it is poor stuff. He is expressing a party point of view and I am expressing my own point of view.
This afternoon the Prime Minister did not face his responsibilities. I do not know whether he did not have time or not, but I urge Ministers to face their responsibilities and not to order inquiries by legal gentlemen, however distinguished. He should remember that the Armed Forces of the Crown respond to discipline and that it is discipline that makes them tick and that to introduce outside inquiries into them is to weaken that discipline. The right hon. and learned Member for Chertsey (Sir L. Heald) may think that that is poor stuff, but I probably know as much about the Armed Forces as he knows about the law. I am talking about a matter with which I am seriously concerned. It may not be politically convenient to the right hon. and learned Gentleman, but it is very important.
A state of affairs has been revealed with which it is our duty to concern ourselves. I want to strengthen the hands of the Prime Minister as head of the Secret Service. I am not asking him, and I do not expect him, to come to the House of Commons and say what he has discovered and what he has done about it, but I expect him to take steps to see that what has been revealed in the last fortnight will not happen again.

11.29 p.m.

Mr. F. M. Bennett: The hon. Member for Dudley (Mr. Wigg) began by apologising in advance in case he bored those listening to him. I can


assure him that for most of us the degree of sincerity with which he always speaks on these matters outweighs any extra degree of loquacity which he may possess even if in one respect, which prompted an intervention just before he sat down, he departed from his usual high standard. It is obvious from what the Prime Minister said that he is as deeply disturbed as anyone by what has been revealed in the last few days and weeks. This is a real quandary about which none of us should make up his mind without considerable time for reflection—how far we can proceed with interference with individual liberties, which we have respected for a long time, to proceed yet further with degrees of security against new forms of espionage which, quite frankly, seem to be an increasing development of modern times. When the Prime Minister asked this afternoon for time for reflection on this. I for one was willing to concede it, and I say that speaking as one who is just as upset by the revelations about the apparent lack of security as anyone on either side of the House.
However, I did not rise to follow the hon. Member for Dudley, though I agreed with much of what he had to say to us. My purpose is for a couple of minutes to draw a contrast. We have had evidence of a wide and dangerous and deep-seated spy ring in this country, going to the very depths of our secrets of State. Remember the indignation which prevailed in certain quarters of this country and certain quarters of this House when our American allies were caught out over the U2 incident. Remember clearly how at that time Mr. Khrushchev used that incident as an excuse to break off what might have been some of the most important negotiations of this decade, how he thundered out his protestations about invasions of sovereignty, about trespass, about espionage unprecedented between peace-loving nations, etcetera, etcetera.
How many people there were in this country—I exempt forthwith the hon. Member for Dudley—who joined in this chorus about how our American allies, and presumably ourselves, by implication, had threatened world peace because of the espionage incident. I remember particularly a speech by Mr. Khrushchev afterwards in which, with his hand

on his heart, he said how deeply he deplored espionage between peace-loving nations, and that the Soviet Union repudiated this form of activity and had no intention whatsoever to operate it.
Why is it that today, when we have had an example surely of calculated infringement of sovereignty, of trespass, of espionage, of blatant breach of any form of understanding, a contradiction of peaceful negotiations between nations not at war, there should be so little protest, that in this House all our protests should be directed towards whether our intelligence services are sufficiently good or not sufficiently good? What of hon. Members who sit opposite below the Gangway, who were so vociferous at that time in criticising our allies and ourselves for indulging in this form of activity? Where are they tonight? We do not hear tonight about a grave crisis, about all those threats to peace between East and West which were raised at that time.
Yet is it not just about as severe a form of infringement of sovereignty, just as severe a form of trespass, when people are sent to our country with forged passports, when officers of the intelligence services of a foreign Power come here to our country, set up radio stations, set up espionage services, and bribe and seduce the servants of the Crown? Is that less serious than flying an aeroplane 50,000 ft. over a foreign country?
All that I have spoken for is that one voice at least shall go out from this House tonight expressing the hope that, if and when we or our allies engage in any form of defensive precautions for our own security, we shall not afterwards be heralded by a sycophantic and hypocritical chorus of protest from certain quarters in this country who seem to think it a threat to peace when our side does something but that the less said about it the better when it is done by the Communist East.

11.35 p.m.

Mr. George Brown: I am surprised at the intervention of the hon. Member for Torquay (Mr. F. M. Bennett). If there exists an hon. Member who still does not know the difference between this kind of espionage and sending an aeroplane thousands of miles over the territory of another nation, with the risk of triggering the kind of explosion which


that may trigger, then he ought to do a little more thinking on the subject.
On one point I agreed with the hon. Member—that when the Prime Minister made his statement this afternoon a number of us, although not bewildered by what the right hon. Gentleman had said, felt that we needed to think about what he had said, what he had offered to do and what he had asked, before we made up our minds on the need for an immediate debate. That feeling was in our minds, and we took some time to consider whether this was something on which we ought to make a speech at the moment or whether, in the light of what the Prime Minister had said, it was better to leave it.
I intervene now because, for a variety of reasons, which I will explain, it seems to us that something needs to be said now, solemnly and deliberately, on a very grave issue which cannot be left, partly because the Prime Minister is going away tomorrow and things ought to be said to him and about him before he goes. Like my hon. Friend the Member for Dudley (Mr. Wigg), I gave his office and that of the Minister of Defence warning of my intervention and the lines which I should take. Moreover, if we leave these matters, then the problems which any possible notification of appeal raise for a subsequent debate could well mean that it would be a longish time before we could effectively say what I feel needs to be said.
The Civil Lord will understand that there is nothing personal in this for him when I say that he is not an adequate Minister to reply to these comments. That is not to say that he would not reply with competence and charm, as he has done in all that he has had to do, but the job is not his and the criticism needs to be addressed to another quarter.
This is a very grave matter and the very size of the catastrophe which has happened in our counter-espionage and secret agencies is of an order which does not seem to have been matched before. I have no wish to exaggerate what has happened, but I cannot acquiesce in whitewash being applied which may well lead, as my hon. Friend said, to our not seeking out what is the matter and putting it right. The fact that in the last twelve months there has been an

impressive degree of work and efficiency in getting hold of these people must not blind us to what happened in the previous ten years. The terrifying thought is not that our Services, once their suspicions are aroused, do not move fast and effectively and impressively, but that for ten years no suspicions seem to have been aroused at all.
This is not primarily a naval matter, as the Prime Minister said in his statement, although the Navy is involved, of course; there are naval issues to be looked at which I will deal with in a moment. But in the Prime Minister's opening remarks—and it is much more clear when one reads them than it was when one listened to them—he said:
I will now make a statement about the recent case of espionage in the Admiralty Underwater Weapons Establishment at Portland.
This gives the impression that it is the espionage at Portland that matters, but that is not the case. The case that we are dealing with is not, as my hon. Friend the Member for Dudley pointed out, the case of two relatively low-grade people, called Houghton and Gee; the espionage case involves the very much higher-grade people, known variously as Kroger or Cohen, and Lansdale, whoever he is, and it involves all the other Lonsdales and Krogers who, pretty evidently, judging from the evidence, have not been caught in the net but of whose operations there appears to be a good deal of evidence.
What the Prime Minister did this afternoon—and what putting the Civil Lord up to answer tonight is continuing to do—was to try to treat this matter as though it was a problem of the security services of the Navy when in fact it is a spy ring operating on a vast scale, which all our other agencies failed to deal with. A professional spy ring of a very high order moved into this country some years ago. We know those who came here around 1954 or 1955; we have got them in this case. We do not know those who came here before that, but it looks from the evidence of Houghton as though there was a ring with whom he was in touch before 1954 and 1955.
But these people moved in here with the greatest of ease; they made themselves thoroughly at home; they have


operated on a fantastically complete basis—if one is to go by the evidence given in court—for five years, and none of our secret agencies knew about them at any stage. They moved in and out of the country at will, and with the greatest of ease, and the next time I am held up at London Airport by that succession of gentlemen who insist upon examining my passport, page by page, to make sure that I am the chap to whom it applies, I will think of the Krogers and the Lonsdales moving in and out with the greatest ease—as they did.
They were well enough informed to know in just what kind of area to put their transmitter so that the abnormal radioactivity in the area would cover its operations, and to this day we do not know with whom they were in contact. It is no use the hon. and gallant Member for Wells (Lieut.-Commander Maydon) laughing. This is a grave matter.

Lieut.-Commander S. L. C. Maydon: rose—

Mr. Brown: Let me finish. To this day we do not know with whom they were in contact, or what secrets they got away with, or what papers they passed.

Lieut.-Commander Maydon: I was just wondering which newspaper the right hon. Gentleman had been reading to gather all this extraordinary information which he is giving us.

Mr. Brown: One can get a good deal of this from the newspapers, and one has one's own sources—[HON. MEMBERS: "Oh."] Yes. If hon. Members think that the Ministers are no more worried than they are saying at the moment they missed the emotion in the Prime Minister this afternoon. To my belief a good deal of this is true, and I think that the Ministers also believe a good deal of it to be true. I, who have not the responsibility of a Minister, feel that it should be brought out, whereas a Minister feels that he cannot do so. I assure hon. Members that they will make an awful mistake if they treat this as lightly as that.
I fear that today the Prime Minister ignored, or tried to ignore, or tried to get us to ignore, all those much wider and serious issues affecting the general

operation of the spy ring, by concentrating it so narrowly on the Admiralty security services—

Commander J. S. Kerans: He did not.

Mr. Brown: I think he did. Looking at the statement one sees that all the way through—I commend the hon. and gallant Gentleman to get it—from the very beginning it deals with the Navy. It goes on to deal with Admiralty establishments and, apart from some assurances at the end about what has not gone, with which I will deal in a moment, in no place does it even mention the problems raised by the existence of this outside spy ring. Quite obviously the Admiralty security services need some overhauling. That is very clear. It may be that some disciplinary action may be called for against some naval officers. I do not know about that. But, for the major breakdown—and this is really why I am speaking tonight—we cannot find a scape-goat among some naval officers. For the major breakdown there is only one place where responsibility can be laid, and where it must be accepted, and that is on the Prime Minister himself—

Commander Kerans: Ridiculous.

Mr. Brown: Yes, indeed. There has to be Ministerial responsibility somewhere. Ministerial responsibility for these counter-espionage agencies rests on him and he must accept the consequence. I believe that today he gave every sign of seeking to escape from it—

Commander Kerans: Will the right hon. Gentleman give way?

Mr. Brown: Let me make my case—

Mr. Allan Green: rose—

Mr. Brown: Let me—

Mr. Green: I am sure that the right hon. Gentleman wants to be fair.

Mr. Brown: I do not—

Hon. Members: Oh.

Mr. Brown: I do not want to be fair to the hon. Gentleman who is doing what he did the other night, and what he does every time late at night—he comes into the Chamber, and when one


starts to speak, he keeps up a lot of "guffing" from the back all the way through. I do not think that is a good basis for asking me to be fair. Let me get on with my speech.

Commander Kerans: Surely the right hon. Gentleman must appreciate that each Armed Service is responsible for its own security, with liaison with outside agencies. I am sure that the right hon. Gentleman will accept that from me.

Mr. Brown: That is not the point. If the hon. and gallant Member would listen and not be so anxious to interrupt, he would get the point. The Services and their security is one thing, but the operation of counter-espionage agencies is not for any one Service. It is not even for the Minister of Defence. It is carried by the Prime Minister.
My point is that it is the breakdown of counter-espionage which constitutes the worry over this. Therefore, it is the responsibilty of the Prime Minister. That is the primary matter. To concentrate this, as he did, on the Navy and the possibility of some disciplinary action being taken against some security officer in the Navy, seemed to me to miss the seriousness of the whole thing; and I think it was a bit unfair.
I think that the security services in the Navy show up badly and, like my hon. Friend, I am as worried by the ease with which serving officers have been willing to talk to the newspapers since as I am about the gaps in the Service before. I think that there is a lot to be looked into there. But I do not believe that is the serious issue in this case—the really vital issue—although of course it is a serious one.
The other thing the Prime Minister did was to try to smother this with a lot of reference to liberty. He rather implied that one of the things we had to consider in doing anything about this was the erosion of the liberty of the individual. [HON. MEMBERS: "Does not the right hon. Gentleman agree?"]—I say that, in relation to what has happened, that is pretty near to complete eyewash. I shall show why.

Sir L. Heald: Now we know.

Mr. Brown: The right hon. and learned Member is behaving in a ridiculous way.

The erosion of the liberty of the individual does not arise in the major part of this case. On the relatively minor issue of whether Houghton and Gee should have been positively vetted and positively cleared or merely negatively dealt with—on that relatively minor issue—there would, of course, be something in this point; but that is a very minor issue. On the general issue of why the counter-espionage agencies did not in fact work with each other, did not in fact pass the information, some of them, to each other, did not take action when they were told what was going on—on these things there is no question of the liberty of the individual.
This is a sheer, complete administrative failure, and it is on that that I say that introducing liberty of the individual, while it has relevance in that relatively minor case of the procedures by which Houghton and Gee should have been covered, has no relevance anywhere else. The effectiveness of our agencies, the cohesion of our agencies, the liaison between themselves and their liaison with our allies—those are the big issues involved, and on not one of those can we say that this case shows other than a complete breakdown.
I shall get the naval part of the case out of the way quickly. The problems here can easily be shown. There was the really big failure in Warsaw to see that when this man was returned the proper entry was made and information was passed. This is in part a naval failure, but not wholly a naval failure as the Prime Minister said today. The Prime Minister said that because this man was on the naval attaché's staff in Warsaw the failure was wholly naval, but that is not true. Both of them were attached to the ambassador in Warsaw and the ambassador had a duty here.
Although the naval officer concerned—a very gallant officer I gather, very well thought of by his contemporaries—says he cannot now remember what he did ten years ago, he was also pretty clear that either the ambassador, or the counsellor, or the Admiralty in London was in fact told. When a breakdown like this happens and the man comes back and is then fantastically appointed to an institution like the A.U.W.E. and it fails to get through that he was sent back from Warsaw as a security risk,


one is bound to say that this is a serious issue of much more than merely naval relevance.

Commander Kerans: rose—

Mr. Brown: Will the hon. and gallant Member allow me to finish? Then he can make his point. I am sure that it will be easier that way. I can only say what I believe and if it should turn out that I am wrong, I shall accept it, but I am saying what I think happened.
That is the first breakdown and it involves the Navy and the Foreign Office. The second is the failure to have decided properly which jobs involving which access at Portland ought to carry positive screening Obviously, if one can go in and out of the strong room and lift such files as one wants, I should have thought positive screening was called for and that negative screening was not nearly enough.
The third matter is the general sloppiness about the files and papers as disclosed by the evidence. Here I am bound to say, having read the evidence, that I am not prepared to accept that this is peculiarly a naval matter. The reasons given for not being tighter at Portland—the size of the staff, the degree of work, and all that—could easily apply at other Service stations as well, and could easily apply at other civil stations as well.
Another reason for thinking that it cannot be dealt with only by the Navy is that one wants to know that someone has looked into the attitude to papers and files in all our agencies, and not just in the Navy.
The fifth is the peculiar five-day week, to which my hon. Friend has referred, for security, with the free week-ends allowed for borrowing plans—about which I shall say no more because he has already made the point.
The next is the, to me, quite incredible business of the security officer saying, "Yes, I was told in 1956 or 1957 that this man had secret papers at home. Yes, I was told that there was reason to think that he was using them for espionage purposes, but I did not do anything about it." That is a statement made by the security officer—who is still the security officer. And the reason given for not doing anything about it was that the information came from the man's wife, and he was known to be on not

very good terms with her. The result is that from 1956 to 1960 this has gone on, because at that stage nobody was prepared to check on that kind of information.
Bless my soul, if we are to be told, and then use a sort of code of conduct of our own to decide whether or not it is information we can use, it is clear that we shall have no counter-espionage service at all and might as well give it up. This certainly needs going into. It is certainly naval, in that it happened at Portland, but I want to know what the general instructions are.
In the White Paper published after the Report of the Privy Councillors—Cmd. 9715—in which the Government announced their attitude to the findings, there were three paragraphs—9, 10 and 11—in which they went into some considerable detail about what should be done if anything was known about the character, or the associations or the actions of individuals in a position to do this sort of thing. Every one of those paragraphs was breached here. How do we know they are not being breached in all the other Services? What is the use merely of putting it right at Portland? What is the use even of merely putting it right in the Navy? Someone has to find out whether, in fact, all our agencies are making their own interpretation in the same way.
I want to emphasise another point made by my hon. Friend—and this, again, is not purely Navy. I refer to the rating, grading, status, prestige of the people given security jobs. Only the other night a naval officer used the phrase to me, "We regard it as a job for four rings, failed." He said that in terms of pay, in terms of the attitude of others, it is not a job that is included in the tours of duty that a likely, up-and-coming man would do. It is, in fact, a job that goes to the man who has reached four—ring level but who realises he has failed.
That is probably true in the other Services as well. It is probably true in the outside agencies as well. It is almost certainly true in the case of many factories doing the most highly-important sub-contract work. That needs to be looked into. It cannot be done by a naval inquiry alone, or for the Navy alone. It must be done for the whole field, and can only be done by a much


broader inquiry than is proposed in this case.
Having said that, I come back to where I started. It still leaves us with the general problem. The general problem which has to be faced is that, even though we have put these five people out of harm's way now, none of our special agencies got on to the affair. It is not due to any of them that matters have ended as they have. They neither got on to the Portland end nor on to the central spy ring. It is no use the Prime Minister using the comforting words he used at the end of his statement this afternoon when he tried to assure us that there is no evidence to suggest that the information related to more than a relatively limited sector and there is no ground to suppose that other information went. The fact is that he cannot know.
I have studied very closely the Attorney-General's presentation of his own case in the court, and I will tell him why I say that the Prime Minister cannot know. He cannot know because we do not yet know when the activities started. There is good reason to assume that something was going on as early as 1956 when Houghton's wife made her allegations, but there is some evidence now, looking back, that he was living high before then. All we can know is that the business started at some time within the last ten years, and probably a good deal more than five years ago. That puts a very great limitation on how much we can know about what information went.
Secondly, we do not know—since the Attorney-General challenged me about this, I will put the point to him—and the Attorney-General made it quite clear that we cannot know, what papers went. We cannot possibly know what files Miss Gee, when she was acting after Houghton was transferred, or Houghton himself before that, were taking out during the free weekends. The papers were taken out and put back before anyone knew they were missing, except on one occasion, for which Miss Gee appears to have been very quickly and easily forgiven. If the papers were taken out, photographed or otherwise used, and then put back, and we do not know what happened, how can we know how much information has gone? How can we know what it covered?
A very distinguished, senior person engaged in the case was heard the other day to say that the terrifying question is this: can one put one's hand on one's heart and swear that we have had any naval secrets at Portland during the last ten years? This is the problem. Can anyone say that? The present Secretary of State for Commonwealth Relations concentrated all the secret underwater work there in 1958, bringing the whole lot together, and we have no way of knowing whether any of that remained intact thereafter, because between then and 1960 there is a complete blank as to what, in fact, was going on and how widespread the activities were.
I have no doubt that we are trying very hard now to find out what has been happening, and, no doubt, we shall find out a good deal. No doubt, people will talk and we shall learn a good deal more than we know at this moment. I, personally, hope that that will be so. I do not believe that the trial disclosed all that happened. I do not believe that we shall ever make up for the ten years during which there were no suspicions. I believe sincerely, speaking as deliberately as I can—this is the reason why we have decided that an intervention should be made tonight on the subject, despite the late hour—that a very grave and terrible business has been disclosed. I say that not with any pleasure, not to make a party point—if it be necessary to say that—not to spread alarm which one would rather not spread. I say it because we are convinced, after having studied what the Prime Minister said today, that if in fact we leave this matter to be dealt with in as limited a way as he proposed, then we shall not have learned the lessons which we must learn if we are not to lay ourselves wide open continually to our secrets being broken.
The radio transmitter continued working after we removed the Krogers. Messages continued to come through. We appear to have broken the code all right, but I understand—

The Attorney-General (Sir Reginald Manningham-Buller): I do not know where the right hon. Gentleman gets that from. He obviously has not read the report of the evidence at the trial. The report of the evidence was that we listened in on the frequencies shown at the time stated on the signal plan and


heard the call sign. There was no evidence about anything else. The right hon. Gentleman ought not to make that kind of statement.

Hon. Members: Withdraw.

Mr. Brown: Of course, I withdraw. I do not consider it as important as all that, but I certainly withdraw.

Sir L. Heald: The right hon. Gentleman does not know anything about it.

Mr. Brown: The right hon. and learned Gentleman is as rude as he is unworthy. I certainly withdraw that. I deduced it wrongly, as it turns out, from The Times report of the passage to which the Attorney-General referred. But I do not think that it is all that important whether we broke the code or not. If we did not break it, it is all the more serious.
What we did deduce, I gather, is that these messages were intended for other agents than the Krogers. What we did not deduce was, since these messages came at a time when, we thought, Moscow must know what action we had taken, that other agents must have been using that channel of communication and that these probably were signals to them to pack up for a bit.

Mr. Wigg: I remember the passage in court. Perhaps my right hon. Friend will allow me to say what my conclusion was. I thought that the Russian intelligence service was as inefficient as our own.

Mr. Brown: I still cannot see any point in treating this in that way. The messages certainly continued to come. They did not appear to be for the Krogers, as far as we could tell. They were on a number of different wavelengths.

The Attorney-General: May I correct the right hon. Gentleman? One signal which was overheard was according to the signal plan found in the Kroger's possession. On the other signal plan which was listened in to, monitoring was done in accordance with the signal plan found in Lonsdale's flat. The inference was that the signals emitted from the Moscow region were for reception either by Lonsdale or the Krogers. In

the course of his summing up, however, the Lord Chief Justice threw out the possibility, on which there was no evidence, that they might be listened in to deliberately and intended for other people in addition to the Krogers.

Mr. Brown: The Lord Chief Justice would obviously be treated as flippantly as I was by an hon. Member below the Gangway.
There is clearly room to suspect that others are here. There is room for suspicion. It is in the right hon. and learned Gentleman's mind, as well as in mine and, I believe, in the minds of a number of other people who have read the evidence, that other signals were intended for other people. It is, therefore, too wide open, too uncertain and too worrying to leave it as the Prime Minister wished us to leave it today.
Ministerial responsibility is the Prime Minister's. He talked quite easily about the disciplinary action which the First Lord might have to take against those he found guilty. What does the Prime Minister do in a case like this, where he is responsible for such a breakdown? I can only conclude that a much wider inquiry than the one which the Prime Minister proposes to set up should be undertaken. Even the Prime Minister, in the course of questioning from this side today, undertook to widen the inquiry from what he originally said it would be. A much wider inquiry than that needs to be undertaken.
Let the Navy deal with its problems, but a wide inquiry into the operation of our agencies and into the very worrying fears, suspicions and doubts, even if they are no more than that, that this affair throws up is needed. I hope that the Leader of the House, who has been good enough to attend this debate, will find it possible to intervene during our discussion tonight on the general issue and tell us how he feels about it.
I am bound to say for the Opposition that, unless we get some evidence of much bigger and more effective Government action than the Prime Minister promised this afternoon, we shall certainly want to return to this subject at a much better time of day to go into the whole matter again.

12.10 a.m.

Sir Arthur Vere Harvey: Of the two Opposition speeches that we have heard tonight I much preferred that of the hon. Member for Dudley (Mr. Wigg). It always surprises me how the right hon. Member for Belper (Mr. G. Brown) seems to know far more about what is going on in the Services than any of us who, after all, have had experience of Service matters and have friends in the Services. The right hon. Gentleman is well-informed about weapons both here and in America. It is regrettable that a Privy Councillor should have made a speech of the kind that the right hon. Gentleman made tonight from the Opposition Front Bench.

Mr. Gordon Walker: I presume that the hon. Member would always want to cover everything up.

Hon. Members: Withdraw.

Sir A. V. Harvey: I would not waste time in trying to cover anything up. I am speaking as a private Member. The right hon. Gentleman is in better form than he was on Wednesday night when he had his little argument.
How could the Prime Minister have been expected to say more this afternoon than he did? My right hon. Friend bears tremendous responsibility in this matter as head of the Secret Service. We are all shaken and disturbed by what has happened, but at any rate the spies have been caught, which is more than could be said for Dr. Fuchs. He got away with it when the Opposition were in power in 1950.

Mr. Hugh Gaitskell: He was caught.

Sir A. V. Harvey: I only wish that he had been given twenty-five years at that time. He is now back with the enemy. It is difficult to assess the damage done by one spy as opposed to another, but it seems to me that the damage done by Fuchs could not be calculated, particularly with our ally the United States. Confidence deteriorated from that moment.
It is interesting to recall what Lord Attlee, when he was Prime Minister, had to say about it. The Prime Minister has been attacked about what he said to-

day about the liberty of the subject. This is what Lord Attlee said on 6th March, 1950:
… I am satisfied that, unless we had here the kind of secret police they have in totalitarian countries, and employed their methods, which are reprobated rightly by everyone in this country, there was no means by which we could have found out about this man."—[OFFICIAL REPORT, 6th March, 1950; Vol. 472, c. 71.]
I did not notice the indignation of hon. and right hon. Members opposite at the time of the Fuchs affair. When the trial was over they did not complain to the Government. It seems extraordinary that the right hon. Member for Belper should do so now. It is the case with hon. and right hon. Members opposite that, if they can do anything with which they can unite themselves for twenty-four hours, they will do it.

12.11 a.m.

Sir Harry Legge-Bourke: I should like to say to the right hon. Member for Belper (Mr. G. Brown) that, as I understand the position, we have been told by my right hon. Friend the Prime Minister that first he will look into the question whether or not the arrangements agreed by the Privy Councillors some years have been obeyed in this case. Having established whether or not they have been obeyed, the second part of the inquiry will be to find out whether those powers are adequate in the light of modern times.
On the question whether individual liberty should be a consideration at all, I was astonished to hear what the right hon. Member for Belper had to say tonight. Surely it is inevitably an issue of the greatest importance. Has there ever been anyone in this country who condemned McCarthyism more than hon. Members opposite? I agree that they should have condemned it, but ought we not to be sure that we do not have McCarthyism setting in in this country? Is it not essential that we should look at this very thing?
Like the hon. Member for Dudley (Mr. Wigg), I, too, spent a morning down at the Old Bailey during the course of this trial. I came away with an impression in addition to that with which the hon. Member for Dudley did. I agree with him entirely about the immense impression of fairness about the whole proceedings But there was


something else with which I came away, and that was a very great sense of pride—pride in the fact that, despite the enormous number of opportunities which must exist for the sort of practices which Houghton and Gee indulged in, despite the enormous temptations which are often put in the way of the weaker of our brethren, nevertheless the vast majority of our Civil Service and of the ordinary citizens outside the Civil Service do not succumb to such temptations. We ought to be very proud that we can rely upon the basic loyalty of our people in the way we can, and ought also to be very proud about the way the Special Branch and all those responsible for investigating the case went into it, unearthed it and made sure there was proof.
The right hon. Member for Belper seems to suggest that every case ought to be known the moment a spy enters this country.

Mr. G. Brown: I did not say that.

Sir H. Legge-Bourke: That was the implication of the right hon. Gentleman's remarks Has there ever been a party in this House which has been more outspoken on the subject of allowing aliens to come into the country without any let or hindrance than the Labour Party has been? If we are to have free entry into this country—

Mr. Gordon Walker: We have never said that.

Sir H. Legge-Bourke: —and give asylum to as many people as we feel deserve asylum, is it not inevitable that now and again someone will slip in who should not do so?
The right hon. Gentleman really cannot dodge this issue. We have to consider the individual liberty of men in this issue. The right hon. Gentleman cannot escape this. To blame the Prime Minister for bringing it in this afternoon astounded me. It seems to me that this individual liberty is one of the very things, surely, on which we pride ourselves. If there has been a slip-up of a very major order—I agree with that—inside the Admiralty on this occasion, and if there has also been—[Interruption.]—if the right hon. Gentleman could possibly contain himself for one minute and listen to me as I listened to him, I should be

very grateful—if there has been a slip-up as between the United States security authorities and ours, as there obviously has been in the case of Lonsdale and Kroger—particularly Kroger—does that necessarily mean that we have got to bring about a system which does not have regard to the liberty of the individual? That is the implication of the right hon. Gentleman's remarks.

Mr. Brown: The hon. Gentleman has now repeated that several times. Really, I do not think anything I said bears that interpretation at all. What I said was that since the major slip-up was an administrative slip-up by the agencies, the argument about individual liberty was irrelevant to that issue and was relevant only to the question of what screening Houghton or Gee should have had. As to what should be done to make the agencies themselves cohesive, to make them work efficiently with effective liaison, I said that the issue of individual liberty was not relevant.

Sir H. Legge-Bourke: The right hon. Gentleman has stated his case again. All I can say is that I think that he must be a good deal more careful than he is apparently prepared to be.
I have felt for some years that we may have to reconsider the whole question of the status of civil servants whom we put into our Defence and Service Departments. In 1944 we had a separation of the Foreign Service from the home Civil Service. When the Labour Government were in power I probed this matter a little because it seemed to me that there might be a case—I think there was then, and I think it is stronger now—for having a separate Civil Service in the Defence Departments and that in creating such a Service it might become necessary for us to make more stringent rules about admission into it than we have in respect of the general Civil Service.
This is obviously a matter which will require very great thought, and I am not beginning to suggest that a decision should be taken tonight. But if it be true, as I am sure it is, that the whole machinery and equipment and technology of espionage has advanced far beyond what we were able to keep within reasonable check in former days, then there may be a case for saying that we have to move with the times in our


requirements of those who enter the Defence Departments. Many of them have an immense responsibility, and in a way it might be a safeguard to the individuals who work in those Departments to know that all who enter have to go through a more stringent examination than those who serve in ordinary Departments.
In security, it is not only the contents of documents that should be kept secret, but the existence of the documents themselves. Sometimes in this House we are in danger of throwing stones through a greenhouse roof. We cannot boast that there is the kind of security that we would like to see in our own party proceedings. I wonder sometimes if those who try to look after the security of this country think that some of our remarks are a little ludicrous.

12.22 a.m.

The Civil Lord of the Admiralty (Mr. C. Ian Orr-Ewing): I apologise to any of my hon. Friends who may wish to speak, but it might be useful for me to intervene at this stage. I think that everything said so far in the debate endorses the wisdom of the action which my right hon. Friend the Prime Minister announced today.
It is equally true to say that we have approached this small aftermath of a debate in the true spirit of the House of Commons. Everyone is clearly anxious to see the security services as firm and sound as they possibly can be. I am grateful to the hon. Member for Dudley (Mr. Wigg) for the statesmanlike way in which he began the debate, and the very reasonable terms in which he made his speech.
I feel somewhat inhibited. As you, Mr. Speaker, said today, we have to be careful in what we say, even though the rules of order allow us to raise matters in debate when an appeal is outstanding. The Lord Chief Justice himself issued a stern warning on this subject last night, and I do not think that any Minister would wish to stand here and in any way jeopardise appeal proceedings by anything that he might say about the five accused in this case. We pride ourselves on the integrity of our judicial system and more than one Member has spoken eloquently about the excellence of the proceedings at the Old Bailey.
I want to correct one or two remarks which have been incorrect. The hon. Member for Dudley and the right hon. Member for Belper (Mr. G. Brown) talked about two statements which have been attributed to a serving officer, Captain Symonds, in one of our national newspapers. I want to explain how this came about.
This officer had already been subjected, as had other witnesses, to a number of telephone calls. During this trial he had been two hours in the witness box. When he came out of the court he was asked for clarification, just as hon. Members are often asked for clarification by HANSARD or by Lobby correspondents as they leave the Chamber, and he said nothing which went outside what he had stated in the witness box. Knowing these facts, and the circumstances in which he was approached by the Press, we can well understand his position. The Lord Chief Justice himself made this comment—and I hope that the House will recognise it—when he said about this officer:
He was as good a witness as we are likely to hear.

Mr. Gordon Walker: In fairness to this man, will the Civil Lord say whether he is now saying that the interview published in the Daily Mail was untrue?

Mr. Orr-Ewing: It is a question of what is meant by the word "interview". If, as we leave the Chamber after making a speech, we are interviewed or intercepted by a Lobby correspondent who asks us for clarification about a sentence which we have used, and we restate the facts in the same words, or as nearly as we can remember them, and that is called an interview, the newspaper is right; but most of us would say that it was given for clarification and for greater certainty. I hope that the House will understand that state of affairs.
The other statements by other officers, who have been naval attachés, or who have now retired from the Service, will definitely be within the terms of reference of the committee of inquiry which we are to set up. Hon. Members asked whether the committee of inquiry should include a naval officer and there were certain comments about that. We are most grateful for the suggestions which have been made from both sides of the House on this issue and they will


certainly be taken into account by my noble Friend when the Committee is set up.
On the speculation about Admiral Thistleton-Smith, my right hon. Friend made it clear that the Committee of Inquiry would be headed by an independent person of high standing, so the "intelligent guess" by that particular newspaper about the Admiral was not quite as intelligent as some of the other things which it has said.
The right hon. Member for Belper asked about the status of our security officers. I take that point as being perfectly valid and I will draw it to the attention of my noble Friend and he will certainly look at the matter. I do not think that it comes within the terms of reference of the Committee, but it is on the borders.
I reiterate that papers were taken—and it is important that this should go out from the House—only concerning matters from the Admiralty Underwater Weapons Establishment. There were no papers there concerning nuclear matters. It would be quite wrong if, inadvertently, we gave the impression, particularly to our friends and allies in America, that nuclear information was in any way compromised.
The right hon. Member for Belper was also quick to quote—and I hope that he will not mind me reminding him of this fact—witnesses who are at present possibly contemplating appeal. When he said that the strongroom was in a high state of disorganisation, he was quoting Miss Gee, and I think that he will agree that that is not an absolutely reliable source. He was also anxious to discuss the business of the transmitter. I think that I am the only licensed amateur transmitter in the House and I should be delighted to have a discussion with the right hon. Gentleman on this issue, but, while the matter is possibly pending appeal, it would be wrong in that case, too, if I started a discussion.
All these matters—points about security officers, naval attachés, reports back from Warsaw and the witness who came back from there, and who was the clerk of the Naval Attaché there, that was Houghton—and other similar matters will be investigated by the Committee of Inquiry. I hope that it will

be a quick moving and fairly small Committee. I know that the House would not expect me, at this stage and at this hour, to go very much further into the subject.
Perhaps the right hon. Member for Belper did not do justice to the burning question which the Prime Minister underlined so clearly this afternoon—the erosion of liberty. I cannot do better than restate something which the Lord Chief Justice said on this matter. He first paid credit to the security services, as the right hon. Gentleman did, and he said:
I would like to draw attention to the excellent work done by naval security officers and police in this case. It must have involved endless and careful work.
This is the point:
Ultimately, security depends and must depend on the honesty of those in a position of trust. If a person of the highest credentials suddenly and for gain becomes dishonest, no security measures can prevent it and its detection becomes a matter of great difficulty.
This is exactly that point which my right hon. Friend dealt with. I think that many of my hon. Friends on this side have spoken most eloquently about this erosion of liberty and the need to move most carefully and with considerable forethought in a wider inquiry. There can be no question that this is the opinion in the Admiralty. We have set up a Committee of Inquiry to inquire where the responsibility lies. Surely that is of first importance—that we take action wherever the fault is shown to exist. That is why we have set up the Committee of Inquiry. That is why we hope to have the help and support of the whole House, so that Committee may get on with its work and so that we can in due course take action on the results of its work.

12.30 a.m.

Mr. Gordon Walker: We are grateful to the Civil Lord for the care he has taken in replying to the debate, but listening to his speech I thought that it only reinforced my view that we must go further and higher on the points which are at issue. His speech dealt only with naval matters, and it showed that naval matters do not exhaust the problems involved. The highest duty of the State, for which the Prime Minister is personally responsible, is the real issue here.
What we are saying is that there is a great deal of prima facie evidence justifying a much wider inquiry. It is not necessary that the naval inquiry, which, I agree, should be got on with at once, must be done first. Two things can go on together. There is a problem of naval intelligence which has to be looked at, but there are these other problems to which my right hon. Friend referred and which seem to indicate that there may have been a considerable breakdown in the wider range of our security measures, in cohesion, in technical efficiency.
Of course, all of us are concerned with the issue of liberty, and of course there is the problem of security which involves this. If we were to take everybody's passport away we should have much greater security, but nobody wants that. The points which my right hon. Friend raised do not impinge on liberty. He showed that there is great doubt now whether there are not technical inefficiencies in more than the naval intelligence—wider than that—which can be remedied without in any way eroding liberty.
I should like to put—perhaps to the Attorney-General—one question. This is a most important case and it is necessary that we should study it with the utmost care and detail. Therefore, I wonder whether we could have the transcript of the entire proceedings available to us in the Library. It is impossible, reading in the newspapers even the fullest reports of the evidence, to discover everything which happened. I do not think there is any other way in which we can do this duty unless we have the transcript available to us.
My last point is that we still think that there should be a further major debate in which the Prime Minister can take part and in which this case can be raised at greater length and at a rather more comfortable hour of the day.

12.34 a.m.

The Secretary of State for the Home Department (Mr. R. A. Butler): As one or two points have been put to me, and as it is obviously difficult for the Prime Minister to be here tonight, and although I do not want to delay the House very long, I think I should say a word on his behalf.
First of all, we were grateful, as my hon. Friend said, to the hon. Member for Dudley (Mr. Wigg) for the spirit in which he raised the matter, and when the right hon. Gentleman the Member for Belper (Mr. G. Brown) says that this is a grave and terrible business he is only repeating what the Prime Minister said this afternoon. I have his words here:
I can assure the House these events have come as terrible blow.
When I add to that his answers to questions this afternoon and his undertaking that he wished, as indeed he does always as Prime Minister, to consult the Opposition and carry them with him in handling this matter, we shall see that, though certain hard things have been said on either side, there is a genuine desire on the part of the Prime Minister and of the Administration as a whole to handle this matter with responsibility.
What the Opposition are seeking is to ensure that this inquiry is satisfactory. The right hon. Gentleman the Member for Belper does not want to feel that this is only an investigation into the security of the Navy. He wants to see that it is properly conceived and carried out.
A second point raised by the opposition, both by the right hon. Member for Belper and by the right hon. Member for Smethwick (Mr. Gordon Walker) was about the possibility of a further debate. I am glad that both right hon. Gentlemen came to the House this evening and raised the matter, albeit that the hour is late, because that indicates a sense of responsibility which we all feel. I am also glad that they did not leave it until later, because, if I may be allowed to leave the House shortly, I can see the Prime Minister before he leaves. I will convey to him the arguments which have been used tonight. If I fail to catch him tonight I shall see him early tomorrow. I will undertake to do that. When the decisions are announced about the inquiry, account will be taken of the depositions made by the Opposition on this occasion and of the reservations made by my hon. Friend the Member for the Isle of Ely (Sir H. Legge-Bourke) on the point of personal liberty, to which the Prime Minister attached so much importance.
That is the useful task which I can perform on this occasion. I wanted to be present at this debate. On three


occasions after Question Time the Prime Minister said that he would like a little more time. The fact that he is going on tour to the West Indies and America does not mean that he will be out of touch with the Government. Our arrangements will be as usual, and, while I shall presumably have to take certain responsibilities in his absence, I shall be able to communicate with him, and before he leaves I shall be able to convey to him the feelings of the House. If he takes a little more time it does not mean that we wish unduly to delay the setting up of what I call the inquiry in the first place—because the Prime Minister made it clear that he wanted an inquiry and then he wanted time to consider the wider issue.
If the Opposition accept that as being the position, it is not necessary for me to underline what the Prime Minister said no fewer than three times after Question Time. For example, answering the hon. Member for Dudley, he said:
I am sure that the right course is to find out what went wrong by the special inquiry and then, with all those who understand it, see whether we need some different system, whether the system of the precise relations between the counter-espionage people and the Department is the right one, and so forth. I prefer to do it in that order.
Perhaps I may underline what the Prime Minister said by explaining the order in which we want to do it. We do not wish to burke any issues. I will undertake to consult the Prime Minister before he leaves and I will undertake to carry out what he said—that as soon as possible we shall announce the inquiry. I will undertake to see that the inquiry is as broadly based as possible, because that is what is wanted. If the inquiry does not cover the subject, I will undertake that there will be a further opportunity, and I will undertake that in the time available consultations shall take place, if necessary, between the two sides of the House and with any of my hon. Friends who wish to make representations to the Government. In that way we can be quite sure that this matter is cleared up to the satisfaction of the House.
There has been some criticism all round, but one degree of criticism I personally cannot stand—and that is the criticism of some of our own security

services in the work which they did, at any rate in the latter part of all this exercise.

Mr. G. Brown: Nobody has said that.

Mr. Butler: No, but on my own knowledge of these affairs I am convinced that we should be grateful to them. But that does not mean to say that I am trying to conceal anything from the House, or trying to detract in any way from the undertakings given by the Prime Minister. I undertake to speak to the Prime Minister and put to him the points that have been raised.

Mr. Gaitskell: We are grateful to the Leader of the House for taking part in the debate, and also for what he has said. He has gone some way to meet the genuine anxieties felt on this side of the House about the sort of inquiries that are to be made. Will a transcript of the evidence of the trial be made available very soon? Perhaps I should address that question to the Attorney-General.

The Attorney-General: There are about eight large volumes of evidence. Steps will be taken to place them in the Library within a short time. I am not sure whether it is for my right hon. Friend or for me to put them there, but steps will be taken to do so.

Dame Irene Ward: My right hon. Friend said that the inquiry would be broad-based. Having regard to the fact that the Prime Minister said that the chairman of the inquiry would be independent, I want to know whether it is his intention to have more than one independent member sitting on the inquiry. From my point of view it would be more satisfactory if, when the first investigation was taking place, there were more than one independent member than merely the chairman. When my right hon. Friend said that the inquiry would be broad-based, I was not sure whether he was referring to the personnel to be appointed or to the inquiry itself. Perhaps he would give us a little more information on that point.
It would help all those who are extremely worried about this matter if there were people on the inquiry who were not just concerned with the Admiralty. We might get better information, and perhaps learn more, if there were more people of independent views sitting on


the inquiry. Lastly, when does my right hon. Friend think that he will be in a position to announce who will carry out the inquiry?

Mr. Butler: I shall take note of what my hon. Friend has said, which I think represents the general sentiment. As regards the timing, I will consult my right hon. Friend again this evening, before he leaves, and in due course the Government will make a further statement.

Mr. Gaitskell: I suppose we may take it that the announcement will be made before the Easter Recess?

Mr. Butler: It is entirely a question of getting the matter established on a proper basis, but I have noted the sense of urgency.

EDUCATION (SCHOOL BUILDING PROGRAMME)

12.43 a.m.

Mr. Stephen Swingler: I hope that now is a convenient time to turn the attention of the House to another subject, which is a major question of education, namely, the state and size of the school building programme. I am glad to have the opportunity of doing this on the debate on the Consolidated Fund Bill, at the invitation of the Minister. I appreciate that he was not able to be present at this hour, but I hope to have an adequate reply from the Parliamentary Secretary.
In a Question on 23rd February, when I asked the Minister of Education about the drastic cuts which he had made in local authority proposals for school building programmes in the last few years, at the end of a series of exchanges he said this:
It is perfectly true that the limiting factor is the total programme. If the hon. Member wants to attack that, it is something that is worth while discussing. But, having got the total programme, I am bound to try to be fair between one local authority and another."—[OFFICIAL REPORT, 23rd February, 1961; Vol. 635, c. 776.]
I am here to accept the invitation of the Minister to attack the total programme. For some time I have believed that the total school building programme for England and Wales year by year has not been sufficient. I believe that it is now not big enough and that it should be increased immediately.
The evidence for this lies in the contrast between the proposals put forward annually by the local education authorities, which are the responsible bodies to put forward to the Minister the needs of the local child population, and the approvals and consents given by the Minister year by year and the number of projects permitted to be built. On the same date as I have referred to, my hon. Friend the Member for Southampton, Itchen (Dr. King) asked the Minister a number of Questions on this subject. His replies were that in the last two years, that is to say the building years of 1960–61 and 1961–62, for major works the local education authorities submitted proposals for new school buildings to a total value of £214 million. The Minister approved programmes to the total value of £115 million; that is to say he cut the proposals of the local education authorities almost in half. For the building years 1961–62 and 1962–63 in respect of minor works the local education authorities put forward proposals for works to the total value of £46 million. The Minister approved minor works to the value of £30 million; that is to say, he cut the proposals of the local education authorities by roughly one-third.
I know that the Minister of Education much objects to our using the word "cut", because he is constantly referring to the fact that the total amount of money spent on education and educational buildings in fact increases. But, nevertheless, when we consider the programmes of the local education authorities as representing the essential needs of the community at large and the child population in particular, it is perfectly correct to use the term "cut" when the Minister refuses to approve much more than one-half or two-thirds of the programmes.
The question always arises: are the proposals which are put forward really essential? There is often the implication in this House, and in controversies elsewhere, that the local education authorities put forward yearly programmes which are much larger than they really need, and that, therefore, it is perfectly fair and reasonable that many of the projects should be deferred and postponed without any great hardship being imposed, because it can be seen that the global programme is of greater value.
I have endeavoured from time to time to probe the question whether local education authorities are expected to put forward year by year everything they want whether they expect to get it or not in the forthcoming twelve months, or to represent to the Minister their essential needs and what is necessary to carry out the principles of educational policy. It is my belief that most local education authorities consider their proposals and programmes in a practicable way, in relation to the accommodation they have got, the replacements they need, the overcrowding in the classrooms and the necessity to recruit more teachers by providing more attractive equipment—that they put forward programmes which are essential.
I speak of things I actually know. On the day when my hon. Friend extracted those figures from the Minister, I at the same time extracted information that in relation to the County of Staffordshire in the last building year the Minister had approved only twenty out of fifty-four educational projects put forward by the local educational authority. On 8th March, I got the Minister to list those projects as they appear in column 48 of the Written Answers in the OFFICIAL REPORT. I see there that in the the forthcoming building year, 1962–3, the Staffordshire education authority has put forward eight projects relating to my constituency, seven for the borough and one for the rural district. Of those eight projects, only two have been approved for that year by the Minister. I know the reasons for those projects, and I know the local circumstances involved. Therefore, I think that I can make a judgment on whether they are essential to meet the needs of the children.
I say that those proposals in that programme are quite limited and modest, designed, not to make startling progress in educational development in Newcastle-under-Lyme, but to endeavour to keep pace in some cases with a fairly rapid increase in the child population or to overcome circumstances which are deplorable. I want to draw the attention of the Minister to some particular cases and to question him about them. Two of the projects he has turned down in relation to the accepted district of Newcastle-under-Lyme concern the new

housing estate of Clayton, the project for an infant school at Roe Lane, and for a new primary school. This is a large and highly-developed post-war housing estate, populated to a large extent by young married couples and, therefore, it has a rapidly increasing child population.
The borough education officer for Newcastle-under-Lyme, commenting on these proposals, says:
We in Newcastle-under-Lyme sorely need accommodation for primary school children in the Clayton area. We now have completed Langdale two-form primary infants school and a two-form junior school, but the birth rate on the estate is running at 160 to 200 per annum, hence our request for the first instalment of Roe Lane.
These projects for new primary accommodation on this estate are not put forward as something that is easily deferable, so to speak, but because the local authority is faced with an exceptionally quickly rising child population on this estate. Unless it gets an extension of primary school accommodation, there will inevitably be increasing overcrowding of the new primary schools in the district. We all know that it is a common experience that when a new primary or secondary school is constructed it is immediately overcrowded because its construction has been long overdue.
Another project listed here, not approved by the Minister, is for the construction of a new secondary girls' school in Newcastle-under-Lyme. This project is urgently needed in order that the existing school may house a junior school at Friarswood which the borough education officer describes as
…an obsolete school which should have been superseded years ago.
The third project to which I refer comes in the list of expansions and adaptations put forward by the Staffordshire local education authority for a secondary school at Nutton, Newcastle-under-Lyme—an old secondary school where conditions have far long been very limited, and which has been the subject of correspondence between myself and the Ministry of Education.
The borough education authority describes the situation here by saying:
Nutton county secondary modern school is bursting at the seams, and it is in a district that wants all the help it can get.


I know it to be a really serious situation, in which the teachers and the authorities strive under the most adverse conditions to provide a secondary school for the children.
Therefore, on the basis of my personal knowledge of the proposals put forward for my own constituency, and others of which I have some knowledge in the County of Stafford, I assert that the proposals put forward by the local education authority are not extravagant. They are necessary proposals designed to implement the principles of the Education Act, to reduce the deplorable overcrowding, and to provide the basis for a decent education for the children.
When we look at the total number of schools under construction in Britain today, we see that a programme that should have greatly expanded has not, in physical terms, expanded over the last few years. I do not want to make too much of these figures, because they do not show how large is the project arithmetically calculated here, but the fact remains that five years ago there were in England and Wales, 335 primary schools under construction, and today there are 234. Five years ago, there were 517 secondary schools under construction; today there are 259. Five years ago, there were over 850 schools under construction; today, there are only just over 500.
There has been a drop in the number of schools under construction, but there has been a rise in the number of overcrowded secondary classes, and we know that all over the country there are still a large number of schools that are obsolete or obsolescent.
In reply to criticisms of his programme and to the demands put forward by local authorities for their own districts, the Minister constantly refers to the global value of the programme. The fact that the global value of the programme has risen is thrust about by him in an attempt to show that he is constantly doing more and more. The true test of this business and of the amount of priority which we give to investment in education and in educational buildings is by reference to the gross national wealth. We know that the figures can fluctuate according to the value of money, but a true picture of the situation can be gained from taking expenditure

on education in general and on school building in particular as a proportion of the gross national product.
I asked the Treasury on 7th March this year to give the figures. They show, for instance, that in 1950 educational expenditure of central and local government in Britain was 3·3 per cent. of the gross national product, and educational building accounted for 0·5 per cent. within that. By 1955, the proportion had risen from 3·3 to 3·5 per cent., but the percentage spent on school building remained the same. By 1959, it had risen from 3·3 per cent. in 1950 to 4·4 per cent. of the gross national product spent on education generally, and the educational building proportion within that figure had become 0·7 per cent. instead of 0·5 per cent.
No one in the Ministry of Education can claim that that represents a remarkable increase in the value placed upon investment in education or in educational building in Britain. In spite of the size of the figures in terms of millions of pounds, the rise in the proportion has been only fractional.

The Parliamentary Secretary to the Ministry of Education (Mr. Kenneth Thompson): Will the hon. Member give the years and figures again?

Mr. Swingler: I took them from the Written Answer of the Financial Secretary to me on 7th March wherein he said:
The following figures show the total expenditure by central and local government on education and child care expressed as a percentage of gross national product over the last ten years for which figures are available."—[OFFICIAL REPORT, 7th March, 1961; Vol. 636, c. 34.]
For 1950, the total educational expenditure is shown as 3·3 per cent. of the gross national product, rising to 4·4 per cent. in 1959, within which building accounted for 0·5 per cent. in 1950 and 0·7 per cent. in 1959. That is the extent of the increase in the proportion of the gross national product devoted to education.
It is not enough. It shows that we are not giving sufficient priority to education, and it should be taken as the basis of an agitation by the Minister of Education in the Cabinet to ensure that a bigger proportion of our resources in


general, and in building in particular, ought to be devoted to the younger generation if we are to have the equality of opportunity and decent environment for education which our children need.
If we make a comparison with other countries, we see also that the Minister of Education is not doing very well. I shall quote now figures that I have had calculated from the latest publication of U.N.E.S.C.O. called "Basic facts and figures: International statistics relating to education", the latest, 1960, edition, which gives a comparison of educational expenditure of the major countries, in units of national currency per head of the population and then calculated per head of the population in United States dollars. I shall not quote these figures at length and I realise that many criticisms and reservations can be made about them, but I have no doubt that the U.N.E.S.C.O. statisticians have taken the greatest care in calculating them.
The result of these figures is to show that public expenditure on education per head of the population in 1959, the latest year taken, in, for example, the United States of America was 92 U.S. dollars. In Russia, it was 113 U.S. dollars per head; in Belgium, 46 dollars, and in Norway and Sweden, 41 dollars. Then comes the United Kingdom at 39 dollars per head. We come way behind the United States and the U.S.S.R. and we also come significantly behind Norway, Sweden and Belgium.
That shows the true position about the priority that is given to education and educational expenditure in this country. There has been a tremendous amount of propaganda and talk about the need to invest large resources to achieve a revolution in education and a new look and a new environment for the children of the up-and-coming generation. The global figures of expenditure are often quoted as if to suggest that this had been done, but, when we compare what is being devoted in terms of real wealth per head of the population with some of the other major advanced countries, we find that we are well down the list in the amount of public expenditure upon education in general.
I am aware that the problem of school building and the provision and construc-

tion of new schools is only a part of the great problem confronting the Department. Equally important is the recruitment of new teachers, because it seems largely upon the recruitment of new teachers that a reduction of the size of classes depends, and a reduction in the size of classes is, perhaps, the most urgent reform and improvement that needs to be made.
I maintain that these questions cannot be divorced. The construction of new schools, the provision of better equipment and better sites, and of more colour and light in the schools and playing fields outside, are all part of the problem of recruiting new people to the profession of teaching and giving them a better opportunity for teaching and, for the children, of learning in the schools. All those who have been about the country today and experienced the joy and, sometimes, the enthusiasm in the newly-built schools, with the better architecture, the colourfulness, the brightness, the big windows, and so on, know that this is a great incentive for recruitment to the teaching profession, just as it is an enormous advantage to the children, It makes a tremendous difference.
In many ways the greatest inequalities that exist in the education system are the physical inequalities that exist between one school and another—the cramped conditions, the obsolescent buildings and the lack of equipment in one school compared with the enormous physical opportunties in another school. This is one of the greatest disparities that exist in many districts.
A push forward and a dynamic drive for the construction of new schools would assist us in solving all the other problems of the education system—of providing greater equality of opportunity and recruiting many more people to the teaching profession. I therefore ask on the basis of the plain facts that I have given that the Minister of Education should address himself to the question of the total programme and examine it in relation to the real needs of the local authorities and the children today. He should examine it in relation to what has happened in some other countries in constructional effort for the purposes of education, and then demand from the Cabinet a much bigger building programme than we have now.

1.12 a.m.

Mr. Frederick Willey: I am sure that the House is much obliged to my hon. Friend the Member for Newcastle-under-Lyme (Mr. Swingler) for deploying such a lucid and cogent argument at this hour of the morning. I congratulate my hon. Friends on being here at double the strength of the Government's backbench support. This no doubt reflects the fact that those hon. Member opposite who are here have not learned of the by-election result at Small Heath which I understand has been a bitter disappointment to the party opposite. It is quite likely that the Small Heath by-election may become of historic importance.

Mr. K. Thompson: It will be unique.

Mr. Willey: We shall see how long it remains unique.
One must stand back and try to discover what factors affected the result. One that comes to mind is the intervention of the Minister of Education. This was one of the major issues at the by-election. The educational issue was raised and apparently the electorate received no satisfactory reply. I want to take this first opportunity therefore, as the Minister's reply was regarded as ambiguous, to put the points quite clearly to the Parliamentary Secretary and demand an immediate and unequivocal reply.
I am glad to see the Minister of Health present. We know that the present Government's policy in the Welfare State was anticipated by the group known as "One Nation", now superseded by the Bow Group. We know of the forecasts about the Health Service made by that Group, many of whom now have distinguished the Government by being members of it, and we know that speculative proposals have been made by the Bow Group about education. We know that the issue facing the Government on education is precisely the same as that which faced them on the Health Service. The Conservative Party was alarmed when it saw the size of the expenditure demanded by the Health Service. This led Conservatives to devise new ways and means of financing that Service. We have recently been discussing some of the matters.
I now want to put to the Parliamentary Secretary the proposals which are at present being canvassed within the Conservative Party. I will take them stage by stage. It is suggested that within the responsibility of his Department there are services which are not educational but welfare—the provision of school meals and the provision of milk for school children. We have no doubt at all about the views of the Minister of Health and of the Government with regard to the provision of such services generally. The proposal is being made that these services which remain on the right hon. Gentleman's Vote might well be reduced, that these are not true educational services. I want the Parliamentary Secretary to take the first opportunity of saying that the Government have no such intention, that there is no question of reducing the contribution made by his Department towards the provision of school meals or milk for school children. He ought to do that in view of the speculation which has followed upon this publication. That is left quite ambiguous by the statement of the Minister of Education to the Conservative candidate at Small Heath. So I hope that the Parliamentary Secretary will take the opportunity to make the position of the Government abundantly plain, unequivocal and without dubiety.
The second point raised within these policy-formulating circles of the Conservative Party is the suggestion that grammar school education is something additional to education at large, that it is something particularly coveted, and that for these reason there might well be a charge imposed upon the child receiving the benefit of grammar school education. I want the Parliamentary Secretary again, unequivocally and without dubiety, to deny that the Government or the Conservative Party have any such proposal in mind. Obviously, the electorate at Small Heath regarded the right hon. Gentleman's reply as equivocal. What the right hon. Gentleman dealt with was the issue of providing for payment towards the cost of compulsory education. He did not deal with the question of grammar school education.
Thirdly, we have the proposal made within the Conservative Party that, following the savings at the expense of the milk for school children scheme, the


savings in the expenditure on school meals, and the imposition of a charge upon children attending grammar schools, we might then get a charge upon children attending primary schools.
The significant thing which will not have escaped the notice of the Minister of Health is that in this third proposal the qualification is made that any such charge should not be so substantial as to be such a disincentive as to affect the birth-rate. This is novel for the Conservative Party. The Conservative Party denigrates planning. When ten years ago it made its proposals about the Welfare State it made as its first condition that our population should be roughly static.
As the Parliamentary Secretary knows, the Government have not been successful in that. It is interesting to note that throughout their term of office they have been remarkably complacent about this. In the last annual report of the hon. Gentleman's Department there was the usual claim that the battle of the bulge had been won. It said:
it is, therefore, now possible to say with certainty that the battle of the bulge has been won.
But the Minister now says, in panic terms, that he is again facing a crisis in primary education. He says that there is, unexpectedly, a second bulge coming.
I can understand that he would not anticipate that, because of the views expressed by his right hon. and hon. Friends when they made their proposals about the Welfare State—that it would be to the country's advantage to have a static population. But the Parliamentary Secretary and his right hon. Friend cannot shrug this off as something that could not be anticipated. We have a Government Actuary for these things. Such things have to be anticipated. My charge is that the Government's planning has been based on a concept that there would be a static population.
I want the Parliamentary Secretary to make a statement rejecting absolutely the proposals that have been made within his party, and to give an undertaking that no such steps will be taken by the Government. We are entitled to that assurance. Having indicated that I support the charge of my hon. Friend the Member for Newcastle-under-Lyme against the Government, I must add that

their guilt is the complacency they have shown towards education as a whole.
I concede that the Parliamentary Secretary can produce a lot of comforting facts and figures about the progress we have made in education, but it is no use his denying our charge, because the problem now is entirely different, in quality and quantity, from that which faced us ten years ago. The issue is a broad political one. What is happening in education is happening generally—we are not making a sufficiently intelligent and dynamic use of our resources. One of our greatest resources, if not the greatest, is the intelligence, ability and aptitude of our people. It is a question of using our resources sufficiently to equip ourselves for a new world.
The Parliamentary Secretary can produce comforting figures about the aspect referred to by my hon. Friend. The fallacy of that argument is that the gross national product of this country has increased at a slower rate than that of almost every European country. One of the reasons why the increase in the proportion compares favourably with one or two European countries, about which the Parliamentary Secretary will have been briefed, is that the gross national products of those countries have increased at rates far in advance of ours.
The U.N.E.S.C.O. figures themselves are disturbing, but what makes the comparisons false in any case is the fact on which the hon. Gentleman should concentrate—that we are rapidly losing ground to our competitors in the world's markets and we have to take exceptional steps if we are not to lose further ground.
It is all very well for the Minister of Education to say, as he did recently, that we are losing the battle of exports because we did not devote sufficient of our resources to education in the 1930s: but what is a Minister of Education to say in twenty years' time? The hon. Gentleman should take his right hon. Friend's warning seriously and see whether we are now devoting sufficient of our resources to education so that in twenty years' time we shall be able to maintain our standard of living and face our competitors.
No doubt the hon. Gentleman will say that the difficulties facing local authorities are not exceptional, but the importance of this matter is that local education authority estimates are


realistically prepared and are prepared in the context of the right hon. Gentleman's view of educational requirements. They are not ambitious projects. This is not a case of local authorities going outside the Minister's wishes. The estimates themselves are hopelessly inadequate and we shall not be able to tackle the problem with our sights so low. It is then more than disturbing that, with the right hon. Gentleman's sights too low, he should halve the realistic estimates of the local education authorities.
The Parliamentary Secretary will not deny that, comparatively, we have lost ground in primary and secondary school building. He may say that the Government are concentrating their attention on building for further education and the training of teachers. I say two things to him. One is that we cannot divorce these two things. The teachers will come from the schools, particularly the sixth forms, as he would agree. One of our serious difficulties at the moment is not only in further education but in sixth form education. We have to increase the sixth forms much more rapidly than we have been doing, rapid though we may have been. We cannot divorce the two things. Quite apart from that, however, so desperate is the need that we cannot allow one need to be prejudiced by the priority of another. These are immediate needs.
The tragedy about university education is the appalling difficulty of the need to do something; so desperate is the need for overall priority of education that we cannot afford the exceptional priority now being given to the training of teachers and to further education or allow it to prejudice the other sections of education. I hope that the Parliamentary Secretary will realise this. I have said before that I recognise that within his overall priority he endeavours to exercise priorities as fairly as he can. There is a general feeling throughout the country that not sufficient priority overall is being given to education.
We are disturbed by the fact that this may be further prejudiced by the views which are apparently being canvassed within the Conservative Party about financing the expansion of education. A formula much like the steps which have been taken in the National Health Service would itself be a built-in brake upon

the expansion which we require. We say that not to embarrass the Parliamentary Secretary but because we have real reason to fear this. We are now seeing the true purposes of the block grant. We see in the block grant a built-in moderation of expansion. All local authorities know that the rates are a very unsatisfactory way of financing education expansion—the maximum trouble for the minimum return. We know that the local authorities have to produce their budgets and face an immediate general election. We know this, and the Government know well enough that for those reasons they can produce for themselves an alibi for not doing what is urgently required.
What is required is a matter which ought to be above party politics. We demand as essential for Britain in the difficulties she faces in world markets, difficulties because of the limits upon our natural resources, that we devote far more than we are doing to provide the educational service our people deserve. I hope, therefore, that the Parliamentary Secretary will not try to escape his responsibility for this by producing comparative figures for the past few years, but will recognise that there is an entirely new feeling in the country for the benefits of education and that people are willing to pay what is required. It is up to the Government to see that the people have the education services which they deserve.

1.34 a.m.

The Parliamentary Secretary to the Ministry of Education (Mr. Kenneth Thompson): One of the delights of the Consolidated Fund Bill is that we find ourselves presented with some surprising as well as interesting comments. I hesitate to make a forecast of what the Government Actuary's reaction will be tomorrow when he finds that he has been blamed for the second bulge going through the primary schools. No doubt he will be able to call up enough resources to satisfy himself that he can lay that responsibility elsewhere.
I am sorry to have to disappoint the hon. Member for Sunderland, North (Mr. Willey) in not accepting his courteous invitation that I should allow him to prepare my speeches for me and then deliver them in a manner which no doubt would be more satisfying to him


than I hope he will find my remarks this morning. But I say one thing as a preface to my remarks; it is common practice for those who criticise someone in responsibility to lay upon him in advance, and if not in advance at any rate in course of, and if that is overlooked, soon afterwards, a charge, if he has an answer, of being complacent. The hon. Member took care to build that into his main speech, in case he found that his arguments were less good than they had earlier appeared to be when being delivered with his usual charm and facility. The charge of complacency is the last refuge of the disarmed critic. I hope that he will allow me to make my speech in the knowledge that I shall be charged with complacency anyway, but nevertheless endeavouring to show that that is far from being the condition in which my right hon. Friend or his colleagues in the Government face this very serious and important problem of the education of the country's children.
Let me turn to some of the points raised by the hon. Member for Newcastle-under-Lyme (Mr. Swingler), who invited us to remain with him until this interesting hour of the morning. He made his arguments in three parts—that the school building programme as a whole is not enough, that his own authority and constituency suffer badly both actually and relatively, and that this problem is thrown up because this country does not spend enough on education out of its national resources, and is falling behind some of the other advanced countries of the world. Let us see what the facts are likely to be on a less prejudiced approach than that which, it seemed to me, the hon. Member adopted.
Let me state categorically that the school building programme to which the country is committed is the biggest which the country has ever had in its history. Of course, that sounds complacent to the hon. Member for Sunderland, North. It happens to be a statement of a fact which he does not find very agreeable. It is the biggest school building programme which this country has ever undertaken at any time in its history.
The building programme is proceeding as was forecast in the White Paper which the Government produced in 1958. We are coming to the end of the first of the

building years of those five years. Year by year through the programme we shall spend an average of £60 million a year—a total of £300 million on primary and secondary schools. I will deal in a moment with the other kind of educational building which is taking place, but for the moment I am dealing with the narrow point of school building which the hon. Member made.
It could be argued—and I should not find it difficult to lend a sympathetic ear to the argument—that we should do more school building. No Minister of Education is ever satisfied with his allocation of the nation's resources. No Minister in charge of any Department is content and does not feel that he could not have done with a little more. What we have to decide as a Government is where the total resources can best be allotted and, then, having apportioned what is available between the various schemes, to let them get on with their share as efficiently and economically as they can.
The hon. Member used a remark which I found both strange and disturbing—disturbing not in its merit but in that he believed it to be true—that this country is in some way baffled in its school building, leaving aside the size of the programme. In fact, the schools we build in this country represent a better value for money per pound spent on the building than is the case in any other country building schools at present. It is not possible to compare the amount of money spent on school buildings unless we take into account how many schools we get per million pounds, but as was shown by our experience at the Milan Trienniale at the end of last year, this country leads the world in its design of school building and in the quality and quantity of buildings which it gets for the money invested. We can claim not only that the total sum we are spending on school building is more today than ever before, but that we are also getting more and better schools out of that building than was possible ten years ago, or than is being got today by any other country building schools.
Having accepted that there must be a ceiling, and while I concede that there can be two views whether the ceiling is high enough—and it is not difficult to wish it could be higher—we have to


decide whether the sum within that ceiling is being properly used. For a long while after the end of the war all the resources which were available for school building had to go to new places for new populations in new towns and estates. That is still true, to a large extent, and the hon. Member's own area is good evidence that we have to devote about half our school building resources to providing additional places in those areas to which new populations are moving from the slum areas of our cities. So it should be.
The hon. Member mentioned cases where, in new areas, there is a demand for a new infants' school or a new primary school. That may be so. All I can tell him is that we will devote our resources, as a priority, to seeing that where there is a new school population there will be provided new school places. That does not mean that there will not be, at some time, some overcrowding here and there in one school or another. There are other factors to be taken into account, as the hon. Member knows quite well.
Where a new estate is built, involving hundreds or thousands of houses, all being occupied by large numbers of new young families, with bright, shining new children, the schools are built with a view to providing accommodation for those children in the best possible circumstances that can be arranged, but taking account of the fact that those children will grow up and move out of the primary schools with surprising quickness and into secondary schools, and then be gone from those estates. All of us have had experience of estates built between the wars, where now there is no need for more than about half the school places that were provided when the estates were built.
That is not a decisive factor for not building enough schools or providing enough places, but it has to be taken into account in planning the distribution of resources. We provide school places where they are needed, and at no time in this country since the end of the war have there been any children for whom school places were not available without working double shifts. This is the only civilised country that I know of of which that statement is true. So that, backward as we are in some ways that the

hon. Member has mentioned, let us stake our claim to one factor, at any rate, in which we have a record of which we can be proud; no children have been out of school for lack of a school place in this country since the end of the war, as far as I know, and no other civilised country can make a similar claim.
The second priority in our school building programme is the building and reorganisation of all-age schools. It is no use talking about secondary education for all unless that is done. That will be almost completed in the first three years of the five-year programme, when we have got rid of practically all the all-age schools. But while we are going through the early phase of the programme we have to devote our resources to the necessities.
The third priority is the provision of better secondary schools and improvements in existing schools. Here we are doing the best we can with the remainder of the resources, and I can assure the hon. Gentleman that we are making considerable progress in a great many places. One-third of the children are in schools provided since the war, new shining schools as the hon. Gentleman described them, and all that he said about them is true. They have a remarkable transforming effect on the children and on the teachers, and we are glad about that. But that carries with it a complication. When new schools appear the people who have to send their children to the schools which are not so new see the difference, and the old school, which was tolerable before, now suddenly appears to them to be the worst place in which their children could be educated. That does not happen to be true, but it is a cause of great discontent and a great sense of dissatisfaction. But in a way it is a good thing because it gives a spur and a purpose to the provision of new schools, and to get the programme working as smoothly as possible.
Let me now deal with the point made by the hon. Member about the programmes submitted by the local education authorities. Until we had completed the programme to provide places where they were needed, it was not possible for us even to let local authorities consider spending large sums of money on rebuilding and replacing the less satisfactory schools. When we came


to that point, of course there was a large pent-up demand and a great deal of enthusiasm among local authorities to get new schools wherever possible. So, of course, local authorities put into their bids all the schools they would like to get replaced or improved. I am not criticising them, but I say that it is grossly unrealistic to imagine that all that could be done in one or two years. No local authority really believed that. None of the local authorities which put forward grossly inflated programmes believed that they were likely to get the programmes permitted in the first year. Even if they managed to get the programmes included, none believed that they could manage to carry them out.

Mr. Swingler: The hon. Gentleman ought to be more careful about what he says. He has referred to grossly inflated programmes. That is a libel on the local authorities. They were asked to put in projects in order to improve the accommodation in their areas to what is laid down by the Ministry as modern standards. If the Ministry does not want that, why does not it tell the local education authorities that the standards are to be lowered and that less projects are to be submitted? But so long as those standards exist the Minister must not talk about grossly inflated programmes. They are the minimum programmes required to bring the school accommodation up to contemporary needs.

Mr. Thompson: The hon. Gentleman should not be so sensitive. I am trying to deal with that very point. I say that of course local authorities included as much as they could in their bids in the first year.

Mr. Swingler: Not as much as they could but what was needed.

Mr. Thompson: If the hon. Gentleman would contain his exuberance and listen to my argument, he might find an answer to what is troubling him. The local education authorities put into their programmes a great deal more than they knew they could carry out. In case the hon. Gentleman thinks that is an exaggeration, or that I am doing less than justice to some local authorities, let me quote a case, that of his own authority, which in this matter is very little differ-

ent from many others. In the 1960–61 programme it put in for £1 million worth more work than it has been able to start. That is not a singularly black mark against Staffordshire. Many local authorities did precisely what I have said. I am not criticising them for failure to carry out their own programmes; I am saying that this is one of the facts we have to take into consideration in arranging local authority building programmes over the country as a whole. I hope the hon. Member will not make too much of the fact that some local authorities do not get as much as they ask for in their first attempts to improve all their secondary schools.
Even if we agree that we should like more money to be spent on primary and secondary schools, we do not do ourselves justice until we take into account all the money poured out on other educational building—£60 million on primary and secondary schools, £15 million on improving and extending technical colleges, £8 million on building new and extending existing teacher training colleges, £17 million on minor works, £2¼ million on special schools, in addition to all the expansion which is going on in our universities at the same time. I have not mentioned the expenditure going on in Scotland, about £15 million.
I do not want to detain the House for too long, but I should like to deal with the point the hon. Member made about the relationship between the expenditure we in this country undertake on education and the expenditure in other countries. I first draw his attention to a paragraph in the preface to the document from which he extracted figures. It says, on page 7:
In comparing national statistics countries often use widely different definitions and qualifications and for this reason such statistics are not strictly comparable on the international level. Caution should therefore be exercised in attempting to draw conclusions from the figures in the present collection.
If ever that caveat were necessary it is necessary in attempting to deal with the figures the hon. Member put before the House. I have no doubt at all that the percentage he gave was as near right as it is possible to get. He got it from the Treasury, and I imagine that it is a reliable figure, but when he compares it


with figures given by other countries he must take into account all the enormous number of variants there are in comparing the figures.
First, the figures given for this country and those for other countries in the list from which he drew his extracts refer to public expenditure on education, but this country is peculiar among all the countries quoted in this document in that, in addition to the large sums spent on public education a great deal is spent on private education. There is no comparable element, I imagine, in the figures for the Soviet Union. The figure for the United States is different in other ways on account of the same factor. So the basis from which we start is different before we come to the other factors which affect the argument.
The exact scope of the term "education" varies from country to country. Do the countries he quoted include libraries and museums in their education statistics? Some do and some do not. Do they include school meals, school health, transport, physical recreation, school uniforms? The hon. Member does not know, and I certainly do not know, but this is a vital factor in trying to assess whether those figures are in any way comparable. They may be widely different.
There is the conversion of expenditure factor. The hon. Member gave the dollar equivalents. I wonder on what sort of rate of exchange he based his figures. Are they on the rate of exchange that the world markets quote, the figures for internal consumption by internal residents, or rates applicable to visiting tourists to those countries? All the figures are different and different figures are used by different countries in submitting their statistics for this publication. All of them cut out the possibility of comparing one with another.

Mr. Swingler: I took the exchange rates from the U.N.E.S.C.O. pamphlet itself. If the hon. Gentleman will look at Appendix C, pages 173–178, he will find the exchange rates to enable one to make the comparison by converting all currencies into United States dollars. I appreciate the reservations the hon. Gentleman makes, and in view of them I hope that his Department—which is con-

cerned with U.N.E.S.C.O.—may be able to do something to standardise these statistics in U.N.E.S.C.O. so that in future, we can make a more valid comparison.

Mr. Thompson: The point is that it is impossible to standardise them. Who knows how many roubles there are to the United States dollar when there are three different rates? They do take one of them, but we do not know which—and, if we did, it still would not give an equivalent comparison between what the United States dollar will buy in the United States and what so many roubles worth of dollars will buy in Soviet Russia. It is no use the hon. Gentleman imagining that this is a wonderful stick with which to beat the back of any Government. The whole basis of his argument collapses as soon as he rests on that comparison—

Mr. Swingler: Perhaps I may make one comparison that the hon. Gentleman would surely admit is fair. It is a comparison with the United States, where there can be no argument about the exchange rate of sterling into dollars. In the United States there is private expenditure on education that does not appear in the figures, so it is valid to compare the United States, with its 92 dollars per head, with the 39 dollars spent here. Will he accept that as a valid comparison?

Mr. Thompson: No, I do not quarrel with the hon. Gentleman there. I was hoping to be able to give two or three factors in education in my own way and at my own time—I will not run away from that. But before we come to the question of converting a £ into a dollar, account has still to be taken of the cost of living in the United States: that what a dollar spent there will buy is less than what a dollars worth of pounds—whatever the rate of exchange—will buy in this country, where the cost is less.
There is a world of difference, if one tries to compare value for money, when one makes allowances like that. So I hope that the hon. Gentleman will at least agree—perhaps that is too much to hope—but I trust that the House will accept that it is impossible, quite impossible, to take units of this kind and toss them lightly about. The hon. Gentleman did that, and considered at the end of the exercise that he had


uttered the uttermost damnification of the Government's policy. It simply is not true, as I imagine he knows.
Let me give the other factors. Since we reject what the hon. Gentleman gives as a basis of comparison of things here and abroad—the hon. Gentleman shakes his head. I know he does not admit it—it is, of course, wonderful on the platform or the street corner, but it does not stand up to examination. There are other factors to take into account when trying to assess whether one country is doing as well as another.
The answer is not to be found in comparing how many students are following this course or that, or how many students there are per head or per thousand of population. The situation in the United States is a splendid example of how that can lead one astray. I have seen figures comparing this country with the United States worked out on that basis, but the United States figures include an enormous variety of other considerations that we do not include in our higher education statistics—courses of various kinds that are outside our sphere of higher education altogether. They do not include a number of processes of training and educational development that go on in this country but which are still of higher education standard. Our lawyers, solicitors, architects, accountants, nurses and other professions ancillary to medicine total scores of thousands of people. The statistics which we would offer would have to be taken in comparison with the figures offered by the United States which include not only those but a great variety of others which we do not count in higher education.
We ought to satisfy ourselves that we are doing the best we can in this country with the resources available, that we are trying to use more resources if we can, and we are trying to derive better value from those resources as we go on. This we are trying to do, and we shall continue to do so. I assure the House that we shall do our utmost to see that we go on improving our education service to the full extent of our ability so that our children will have equal opportunities for the best education from which they are able to benefit.

Mr. Willey: Before the Minister concludes, we should have the matter quite

clear. There seems to be worse complacency than I should have expected. Is he saying that it is quite impossible to obtain comparative figures of costs in education? I warn him, before he replies, that his right hon. Friend has drawn very disparaging comparisons between this country and West Germany, Russia and the United States, for instance. Did he do that without any information?

Mr. Swingler: And what exchange rates did he use?

Mr. Thompson: There we are. I am simply inviting the House to consider how extremely dangerous it is to try to make comparisons without having, first of all, established all these other factors which form the basis of any fair judgment.

Mr. Wiley: I am trying to be helpful to the hon. Gentleman. Is he criticising his right hon. Friend? I will tell him, if he does not know, that his right hon. Friend has time after time drawn disparaging comparisons between Britain and certain other countries in regard to education, particularly higher education. I imagine that the Minister has done that because he has been—

Mr. Deputy-Speaker (Major Sir William Anstruther-Gray): I hope that the hon. Gentleman will bear in mind that he has exhausted his right to make a speech. I understood him only to be asking a short question before the Minister terminated his own speech.

Mr. Willey: Your understanding was perfectly correct, Mr. Deputy-Speaker. I was following the usual custom, if I may say so, and trying to clear up a point which the Parliamentary Secretary made. This is an important matter, because he has relied upon it in the course of his speech. To put it quite simply, is he saying that we can obtain no reliable guidance on comparative costs of education?

Mr. Thompson: I will put my answer as briefly as I can. It was the nub of the argument which I was offering. None of these figures and comparisons must be accepted without making all the qualifications and reservation which I made in the remarks I have just addressed to the House.

Mr. J. J. Mendelson: The Parliamentary Secretary really ought not to use that sort of argument. He must be aware that for the purpose of comparing wages, for instance, this problem was solved by our economists many years ago, and these adjustments are currently made to give us reasonable figures and comparisons. There was nothing new in what the hon. Gentleman said on the subject, and he would be well advised to accept our point that there is not an insuperable obstacle to the making of correct comparisons.

Mr. Thompson: I do not accept the point at all. I have simply stated a fact relating to the argument which the hon. Member for Newcastle-under-Lyme offered as a basis for criticism of the effort which this country is making in its education service, and I reject that basis.

MEDICAL PRESCRIPTIONS

2.4 a.m.

Mr. B. T. Parkin: I have given notice to the Minister of Health, to whom I am much obliged for his courtesy in staying in person at this stage of our discussions, that I wish to raise the question of the professional ethics of revealing the cost and content of medical prescriptions. I use that phrase because I want to narrow my intervention to one particular problem arising from the recent increase in the Health Service charges.
During the course of many debates on the subject, the Minister was very anxious to persuade us—he had quite clearly convinced himself—that the hardship which many hon. Members thought would fall upon people as a result of their having to pay an increased prescription charge for an article which did not, in fact, cost as much as 2s., had been exaggerated. The Minister gave an unqualified assurance that in the case of appliances on prescription, the normal retail price would be charged and the item crossed off the prescription list and noted as not prescribed. He went on to give, I thought, confident assurances that the same thing would apply in the case of medical preparations and formularies which found a place on the prescription form and which could be recognised by the dispenser as something which could be sold at a retail cost of less than 2s.
The Minister will be aware that there has been a good deal of dismay and grumbling at these increased charges and uncertainty by the public and among pharmacists. Many of us have had representations made to us about the hardship of the new charges on these grounds. The Minister will be aware that in theory there are a large number of common formularies—I am told, between 200 and 250 of the prescriptions in commonest use—which cost less than 2s. retail. Therefore, their elimination from the prescription and getting a cash payment for them over the counter should be an important part of the pharmacist's work.
When representations have been made to me about the matter in recent weeks, I have replied that the Minister has given assurances that there is a way out, that the chemist can indicate the cost of the prescription and, if it is less than 2s., he can charge it over the counter. I have said that although that does not, in my view, justify the Minister's policy, at least it is something which adminstratively would work out when chemists and the public became accustomed to using that machinery.
It seems, however, that there is no immediate prospect of that working out, because the pharmacists are disquieted by the intrusion into their system of professional ethics in this matter. This came to my notice, in particular, when one of the people who had been protesting to me about this, following representations from a dispenser who was disturbed about it, had herself occasion to call in a doctor to look at a 3½-year-old child who had a tummy pain.
The Minister would wish, as the medical profession wishes, that in the case of young children there should be no question about notifying the doctor quickly. He would rather be told and come and look at the child, prescribe, perhaps, a soothing teaspoonful or so and see whether he was all right next morning and that it was not appendicitis or something serious. That involved, in this case, taking a prescription to the chemist to get a tiny bottle from which a couple of teaspoonful would be drunk. The mother tried it out on the chemist and asked him, "What is this? What will it cost?" The chemist was indignant and replied, "I cannot tell


you either of those things. It is against the professional ethics of pharmacists. It does not matter what the Minister has said. It cannot be done."
I then sought the advice of the chairman of one of the regions of the union representing the pharmacists to ascertain the weight of their objection. What the pharmacist says is that he must respect the secrecy of the doctor's prescription and that the doctor is entitled to protection by the pharmacist of the confidential nature of his prescription if he chooses to prescribe, appropriately to the nature of the complaint, something which the patient might consider trivial, not sufficiently costly and not sufficiently effective to change his or her condition.
The situation therefore, as I understand, is that if the doctor chooses to write on a prescription form "25 aspirin tablets" the patient can read it and knows what it means, and the chemist can say, "You see what this is. You can have 25 tablets for 6d. over the counter or you can pay 2s. for having the prescription dispensed." But if the doctor writes "Tabs, Acetylsalicylic Acid, 5 grains" and the formula for taking one three times a day, as a professional secret the pharmacist is not entitled to say, "This is only aspirin. Give me 6d. and you can have 25 tablets".
This is of some professional importance. I do not know whether the Minister has thought of it in these terms. I am sure that he will now. If he gives an assurance that he will do so then, though this happens to be the shortest of the debates on the Consolidated Fund Bill, it will at least have proved worth while. It will not be easy for the Minister to get over this problem. I suggest that he should consult the professional organisations and try to get back on to the doctor the responsibility of deciding whether or not the nature of the prescription can be revealed. I do not know how it can be done, but it ought to be the doctor's decision rather than the pharmacist's whether these things can be sold at less than 2s. Perhaps the Minister will have these consultations and seek an administrative way out and then cause a statement to be printed by his Department and distributed for hanging up in places where prescriptions are dispensed.
This leaves a further point which will be a little more difficult from the Minister's point of view. It is that the outpatients' departments of hospitals are not empowered to sell drugs and take cash. They do not have a little cash chemist's shop in the clinic. Therefore, there is the special difficulty that those in charge cannot say to a patient, "You had better have 6d. worth of aspirins to take home." It seems that with them it is a prescription charge or nothing. I do not know the answer to that problem either, but the Minister can think it out. I should have thought that it was not impossible for an out-patients' department to give small quantities of cheap preparations which may be necessary at the early stage to see what will develop in an ailment about which the patient has sought a consultation, and enough to last until the next visit.
I suppose that the Minister would not think that was a good arrangement. I must say that on this last point we are pressed inevitably to the conclusion that a free service at the point of need is the only logical answer, and if it applies to the out-patients' department it ought to apply to pharmacists in general. There is no need for us to re-debate that subject now. All I ask is that the Minister should accept that this problem is a little more intractable than he appeared to think when he gave us an assurance in the course of previous debates, but that that should not prevent his tackling it within the framework of his own policy effectively and rapidly.

2.15 a.m.

Mr. Kenneth Robinson: The House should congratulate my hon. Friend the Member for Paddington, North (Mr. Parkin) on his persistence in remaining here until two o'clock in the morning to raise a narrow, but, I think, very important, matter. I am sure that the House would also like to thank the Minister of Health for coming here in person to deal with it.
Before I deal with the matter which my hon. Friend has raised, I should like the Minister to clear up what seems to me to be something of a mystery arising out of a speech which he is supposed to have made this afternoon. The only report I have is from the tape, and it is very short, and it may, indeed, be a misreporting. The Minister was addressing the


annual meeting of the Central Council of the Conservative Party, and the report on the tape said:
Mr. Enoch Powell promised this afternoon that the Government would reconsider its refusal to let private patients get drugs on 2s. National Health Service prescriptions.
The report went on to say:
Immediately after he gave this promise, the delegates narrowly defeated a resolution expressing grave concern and demanding serious reconsideration of this matter.
I do not know whether the delegates, assuming that the Minister said what he was reported to have said, were dissatisfied about the nature of the reconsideration, that he was not perhaps serious enough, but the fact is that a very large number of them voted for the resolution expressing concern.
The Minister does not need me to remind him that we on this side of the House regard this campaign as a squalid one from a pressure group which is wholly unrepresentative and which is merely trying to get increased privileges for a group which is already favourably placed. We think that to give in to this demand would really begin the destruction of the National Health Service so far as general practice is concerned.
I do not want to go over the arguments at this stage, but there is no need for me to warn the Minister that if he were to give in, this would really result in a major explosion not only on these benches, but in the country as a whole. On the other hand, if the Minister will continue his resistance to this pressure group, he can have all the support that he wants from this side of the House, short of our actually embarrassing him. I invite the right hon. Gentleman to clear up this little matter, because this is probably the last opportunity that we shall have this side of Easter.
I now turn to the matter which my hon. Friend raised about the prescriptions which cost less than the charge of 2s. The Minister has told us that he estimates that these will be a very small number. He has said that his estimate of the revenue from these increased charges is based on the assumption that the number of prescriptions will fall by 2 per cent. He added that the principal factor in the 2 per cent. was the elimination of the prescriptions costing under 2s.
There is accumulating evidence that the Minister has made an under-estimate

in the figure of 2 per cent. I see from The Times today that the secretary of the National Pharmaceutical Union says that he thinks that there will be a reduction in the number of prescriptions of 10 to 15 per cent. Some of my hon. Friends tabled some Questions on Monday listing a very large number of proprietary products in which the average normal weekly prescription would be substantially less than 2s. Does the Minister still think that 2 per cent. is the right estimate for these small prescriptions?
If the Minister's forecast is wrong, what does this add up to? First, it means that if the number of prescriptions falls below the estimate he has made, he will not get the £12½ million which he estimated he would get from the increase in charges. Perhaps he will get nothing like that figure. Secondly, it means, as we have prophesied, that patients will go without medicines in quite substantial numbers. I do not want to deal with the question of the hardship arrangements, but the more we learn about the National Assistance Board arrangements the less satisfactory they appear to us.
I now turn to prescriptions costing under 2s. My hon. Friend has outlined a number of serious objections to the course which the Minister has advocated to the pharmaceutical profession. As I said at Question Time the other day, if a chemist is to have to look at every item on the prescription form, as he gets it across the counter, from the point of view of cost, to see whether any item will cost less than 2s., it will undoubtedly put a considerable additional burden on him. It will be a time consuming process if he does it conscientously and honestly, as the majority of chemists will do it. But those who are less conscientious have a built-in disincentive to do anything of the kind.
The Minister could say that if the item is sold retail over the counter, the chemist will get his retail profit margin on it, but he gets an on-cost on the ingredients when he dispenses a prescription which, I would guess, is roughly the same. He gets a dispensing fee in addition, and, therefore, if he is honest with the customer and tells him that he can get an item across the counter, have the prescription marked "Not dispensed", and thereby save money, he will lose his dispensing fee. The chemist will thus


have a disincentive to do what the Minister invites him to do.
These are comparatively trivial objections compared with those mentioned by my hon. Friend concerning the relationship between the chemist and the doctor. I believe that the Minister has been far too casual about this. I do not believe that doctors are in any way happy about the proposal that chemists should be allowed merely to strike off items from their prescriptions and mark them "Not dispensed". Doctors I have spoken to say that they expect their prescriptions to be dispensed as they are sent to the chemist. Then there is the other matter mentioned by my hon. Friend—the question of the hospital pharmaceutical department, where there is no provision for retail sales, as far as I am aware.
There is another aspect which has just come to my notice. I do not think that the Minister foresaw it, and I think that it is an unintentional consequence, and an unfortunate one, of his new provisions. The effect of increasing the prescription charge to 2s. seems to have set up a sort of conditioning process. The manufacturers of proprietary drugs will feel that the public is conditioned to regarding 2s. as a sort of minimum figure for a drug supplied over the chemist's counter. Indeed, the effect of this can already be seen.
I am told by a correspondent that his wife has for a long time been in the habit of buying across the counter a laxative, widely advertised and widely used—how effective it is I do not know—called Bile Beans. For some time they have been 1s. 8½d. per tube. By an extraordinary coincidence, on 1st March, the day that prescription charges were increased to 2s., the 1s. 8½d. tube went up to 2s. I am quite sure that these is some connection, direct or indirect, between the new prescription charges and the increased charge for the preparation, and we ought carefully to watch whether that happens with other similar preparations.
I reinforce my hon. Friend's plea to the Minister to study this matter very carefully and, if necessary, to reconsider his proposals. He will find that the matter of these prescriptions of less than 2s. is not quite as simple as he implied in the first place, and, if he comes to

that conclusion, I am sure that he will not be afraid to come to the House with amended proposals.

2.26 a.m

The Minister of Health (Mr. Enoch Powell): First, to deal with what I may call the extraneous point raised by the hon Member for St. Pancras, North (Mr. K. Robinson), it would be inadvisable to comment at second-hand on a report seen on the tape. I suggest to the hon. Member that both he and I should look in the morning at what has been reported, when I will consider it and see whether it represents at all correctly what transpired.

Mr. K. Robinson: Did the right hon. Gentleman say it?

Mr. Powell: I do not know what I am said to have said. I think that we shall get into great difficulties if we engage in argument at second-hand on what has been reported on the tape. Perhaps we can leave it at that and study the reports at our leisure, to see what they actually say.
To come to the point of substance in this short debate, of which the hon. Member for Paddington, North (Mr. Parkin) was kind enough to give me notice, I say clearly and emphatically that nothing I have said alters, or can alter, the ethical and other obligations of the chemists. The duty of the chemist, and what he can do within the ethical rules of his profession, is in no way altered, and cannot in any way be altered, by anything I have said.
Moreover, nothing I have said about the sale of items costing less than 2s. retail differs from what has hitherto obtained with regard to the sale of items costing less than 1s., so that no new principle or new procedure is introduced, and no statement of mine in reply to Questions, has been intended to imply that there is any innovation.
The situation is this. Where, within his duties and within the proper procedure, a chemist would be able to sell an item retail over the counter for less than 2s., I expect that he will do so, and there is a recognised procedure which he then follows for marking the prescription form. That does not mean that there is any alteration or modification in the way in which he is entitled to


treat a prescription form from a doctor, whether it is an E.C.10, or a prescription form made out privately by a doctor for a private patient.
Misunderstanding may have arisen, at any rate in part, by a confusion between ingredient cost and retail sale price.

Mr. Parkin: indicated dissent.

Mr. Powell: I mention this even though that confusion may not have been present in the hon. Member's mind. I am advised that where the actual dispensing of a prescription is in question, it would be rare to the point of impossibility for an item sold retail over the counter to be charged for at less than 2s. In practice, we are here dealing only with cases where, within the rules of his profession and within what he is entitled properly to do, the chemist would be selling an item over the counter—and it would be only a very simple item—for a sum less than 2s.

Mr. K. Robinson: Would the right hon. Gentleman clear up that point? Does he mean that when a dispensed item is sold over the counter the dispensing fee is such a large part of the 2s. that the total would probably be above that?

Mr. Powell: That is exactly the case; and that is really a large part of the answer in regard to hospital out-patients' departments. I have looked into this with considerable care, and have made inquiries about the sort of items which are dispensed in hospital dispensaries to out-patients. I find that in the overwhelming majority of cases those items if bought on private prescription from a chemist would cost, when dispensed over the counter to the customer, more than 2s. It would be extremely exceptional for there to be such an item which could be obtained on prescription over the counter at the chemist's for less than 2s.
Nevertheless, where a simple item such as bandages or kaolin is prescribed I do not doubt that the dispenser at the hospital dispensary would say to the patient, "This is an item which you can get at the shop down the road." I think that common sense in that extremely small minority of instances would be

applied in the circumstances of the case by the hospital dispensary; but I repeat that in the overwhelming majority of cases, where there is actual dispensing involved and not some appliance or item of ordinary use, then the patient is not getting an item which would be obtainable on prescription at less than 2s. across the counter.
The hon. Member urged me to have further consultations with the profession on this matter. As I think he knows, I am considering with their representatives whether, although this is only further application of arrangements which are in existence and are understood, any further guidance or clarification is required. I must await the results of that. Indeed, more generally, I would say that I shall of course watch closely how this works out.
The hon. Member for St. Pancras, North referred to the best estimate I could make, upon which I had founded the figures in my Estimate laid before this House. I think it must be far too early to form any impression yet how far they will be fulfilled. It takes, after all, two months for the first prescriptions since 1st March to come through for costing and analysis, so I think that it would be very premature for us, on partial reports, to come to any conclusion on how this is working out in terms of numbers of prescriptions or yield of the charge.
I would very much recommend the same attitude of suspension of judgment to the hon. Member in regard to the cost of a tube of Bile Beans. I do not even know whether it is within my competence to make inquiries as to what may have been the causes behind this "extraordinary coincidence" to which the hon. Member drew attention. So I think that we must suspend judgment there till we have a lot more experience of the facts as they unroll.
One final thing I should like to say. I began by emphasising that nothing which I do or intend, or, indeed, can do, can affect the ethical duties of the chemists. I want to end by saying that, although it may perfectly well be true that in the individual case it might pay the chemist to dispense on an EC 10 an item he would be entitled to sell for much a smaller figure across the counter to the customer, I have not the slightest doubt that the chemists in this matter


as in others will deal ethically, that they will play fair by the customers. This is really a theoretical difficulty. I do not believe that chemists, in practice, will be in any hesitation about fair treatment of their customers.
This brief debate may have served to remove some misconceptions, and I have been glad of the opportunity to re-emphasise, in reply to the hon. Member for Paddington, North, that there is no question of any interference with the accepted standards and procedures of the pharmaceutical profession.

Question put and agreed to.

Bill accordingly read the Third time and passed.

AIRPORT CHARGES

Motion made, and Question proposed, That this House do now adjourn.—[Mr. F. Pearson.]

2.35 a.m.

Sir Arthur Vere Harvey: I am grateful to you, Mr. Deputy-Speaker, for allowing me to raise the question of airport charges on the Adjournment even at 2.35 a.m., and I make no apology for doing so, because I should have raised it a month or so ago but, by arrangement with my hon. Friend the Parliamentary Secretary, it was agreed that I should raise it on another occasion.
The Minister for Civil Aviation intends to increase the landing fees at airports in Britain by 33⅓ per cent. next month. With great respect, I think that he is quite wrong in contemplating this step. The International Air Transport Association has protested to him, and I understand that the director of the association, Sir William Hildred, had an interview with him. I am told that there are 40 airlines using United Kingdom airports, 20 of which are equipped with turbo-fan aircraft.
It is well known that the airlines of the world, with scarcely an exception, are making very small profits; indeed, many are making losses. When I questioned my right hon. Friend about this decision about a month ago, he implied that he would not subsidise the airlines. Nobody is asking him to do that, but we are dealing with a comparatively new

industry—which is expanding, perhaps, too rapidly—and I contend that in this respect Britain must not lag behind.
In my submission, the airports of this country, and certainly London Airport, could be more efficiently managed. London Airport was conceived after the war by the Labour Party—and I am sorry that no hon. Members opposite are present to listen to me. They went into the design and construction of London Airport showing little or no imagination and not taking into account what other countries might do or even what they had done. As a consequence, we have a cumbrous organisation at London Airport and passenger traffic is subject to many irritating delays.
The layout of London Airport, Central—as it is known—as well as the lengthening flight check in timings necessitates the employment of additional staff to ensure proper handling of passengers than would otherwise be the case. It is one of the few airports in the world where frequently on taking off or arrival one has to undertake a journey by bus to get to and from the aeroplane. On arrival it may require two buses. One must perhaps wait for a passenger who is suffering from arthritis and who comes down the steps very slowly. One is tired and wants to get home, but one must undertake a bus journey to reach the airport. That is because the airport was badly designed. It ought to be circular, with piers leading to the aircraft, as in many international airports of the world.
I now want to deal with the question of landing charges for aircraft. These were increased by 50 per cent. in 1957 and 28 per cent. in April, 1959, and now we are told they are to be increased in Great Britain by 33⅓ per cent. in April. These increases have taken place at comparatively short notice. I want to give one or two illustrations. When the new landing charges come into force next month the charge for landing a jet Boeing or a DC 8 will be £243. At New York, taking into account fuel tax, ancillary fees and all the extraneous charges, the landing charge is about £138, which is nearly £110 cheaper than in London. In Paris it is £115 at night; in Brussels £117; in Rome £102; in Copenhagen it is £74; in Frankfurt, £71; in Zurich, £58; in Amsterdam, £50 and


in Hong Kong, £139. Britain is well in the lead, and this is very unfortunate.
The costs of running our airports are considerably higher than they are for running those of other countries. The operating costs of a commercial landing, excluding technical services in London in 1959–60, was about £57. At a similar airport in the United States it was £10 5s., and in Copenhagen it was £17. It has been contended that the rents paid by airlines for the buildings at London are included in the landing fee. On the contrary, airlines pay separately for their counter space, offices and any buildings they occupy. In London it is £7 per foot run, and in Idlewild it varies from £2 16s. to £4 4s. per foot run.
My right hon. Friend the Minister has said that when we take into account the fuel tax and other things are added up, it makes a very big figure. That is not really so. The New York authority has imposed a fuel levy on oil companies. Fuel facilities at Idlewild have been constructed at the authority's expense. Oil companies are charged small amounts to amortise buildings. This is a contractual arrangement and has nothing to do with landing fees. I am told that London is the most expensive airport in the world, with the possible exception of Khartoum.
I now go back to other matters affecting London Airport. A modern airport today must have a cargo depot to handle freight, which is increasing, probably at the rate of 20 per cent. a year. London Airport was planned to have three sheds of 90,000 sq. ft. each. We shall be fortunate if we have 60,000 sq. ft. by September of this year, and the project might not be completed until 1966. I contend that there is a strong case for an independent authority to operate these airports. I am not criticising my right hon. Friend or the Parliamentary Secretary. They have been in office only for a very short time, and I know that they are doing their best to tidy up the situation. Minor improvements have taken place in recent months as a result of their efforts. But if an independent authority operated the airports they would be comparatively free from Parliamentary pressures and would be better able to deal with labour problems.

They would develop revenue earning sidelines and have closer relationship with the airlines and would be free from the cumbersome procedures of the Civil Service.
I wonder what my right hon. Friend pays the manager of London Airport. I imagine his salary is related to that of a certain grade in the Civil Service. My estimate is that it is not much more than £3,000 a year, with possibly a small entertainment allowance to look after V.I.Ps. when they come and go. But I am told that the manager of the Idlewild Airport gets nearer £20,000 a year. It is a vast industry. London Airport is not a small, fiddling airport, but an industry on its own. It needs a tremendous amount of managment. I am not saying that the existing manager does not do his job. He probably does it extremely well. Whoever it is, he should have a far greater salary than he receives at present. Probably he earns far less than many airline captains. The Port of New York authority insists that the airport must endeavour to pay its way, but that is certainly not the case at London Airport.
The additional cost of the airlines, as the result of the increase in charges will amount to £1½ million a year, but if the other airports follow suit, as they probably will, it will cost the industry £10 million a year, which will cause inflation among the airlines. I wish to refer to the road congestion and the car parking facilities. If one arrives at London Airport and there is a car waiting it is necessary to carry luggage over railway sleepers, and in the dark this can be really dangerous. I wish to know what will happen when the Central Buildings open later on; as I see it, the traffic congestion will be even worse. Yet I understand the Standing Joint Committee was assured as far back as 1953 or 1954 that the development plan made ample provision for parking and garage accommodation. The work on those garages has not yet commenced.
My right hon. Friend has got round the problem to some extent by an enormous increase in the parking charges and recommending passengers to travel by bus. But we should not tell passengers how they are to travel to and from the airport. If they want to use a private car and park it at the airport, they should be allowed to do so.


I suggest that something needs to be done urgently.
In 1959 the airline movements in London were nearly 119,000 with passenger traffic of just over 4 million. At Idlewild there were 209,000 movements with nearly 7 million passenger traffic. At Los Angeles there were 234,000 movements with nearly 6 million passenger traffic. The reason is that those airports go out to attract traffic. Chicago is the busiest airport in the world with 354,000 airline movements and 9,500,000 passenger traffic.
I am told that 25 per cent. of the movements at Chicago are private or executive aircraft. It is extremely difficult for private aircraft to get to London Airport even with all the radio aids. We must approach this problem in a business-like manner and bring some sense into the whole situation. London Airport is a bad advertisement for Britain. I hesitate when I go to meet friends or business colleagues from overseas who arrive at London Airport. There are Customs delays, though that is not the fault of the officials, who do their best. The airport is already out of date and unsuitable for the job. I suggest that my hon. Friend asks his right hon. Friend, even at this late date, not to go ahead with these increased charges but to bring some efficiency into the industry by making more money with the facilities available rather than start a spiral by increasing the charges.

2.50 a.m.

The Parliamentary Secretary to the Ministry of Aviation (Mr. Geoffrey Rippon): I am very sorry that my hon. Friend the Member for Macclesfield (Sir A. V. Harvey) had to raise this very interesting matter at such a late hour, particularly as it was for my convenience that he postponed the earlier discussion. Before offering what I hope he will regard as a complete defence to all his specific criticism, I should like to make a few general observations about the broader issues of airport management to which he referred. My right hon. Friend is by no means persuaded that the present arrangements for managing airports are the best or necessarily the only ones. He is at present engaged on a review of policy in this field.
One of the main questions being considered is whether any or all of the civil aerodromes at present owned and operated by the Ministry of Aviation should be handed over to some form of independent public authority. As my hon. Friend knows, the aerodromes were taken over after the war for operation by the Ministry of Civil Aviation, as it then was, when it was argued that the cost was so great and the problems so interwoven with other problems of government that there was no practical alternative to the course which was followed. From time to time the possibility of setting up a public authority to assume the management of these aerodromes has been considered, but even when some of the special difficulties which followed the end of the war had been overcome, there remained the impediment that the aerodromes were still casting a lot of money which had to be supplied for the Exchequer and were far removed from the time when they could pay their way.
In those circumstances, the aerodromes, even if transferred to a separate authority, would require subsidy and continue to be subject to the normal departmental and Parliamentary control of expenditure. As time passed and the commercial prospects of the aerodromes improved, the case for continuing the present arrangements becomes weaker and the disadvantages of departmental management become relatively more significant. The question we are trying to answer is, has the time now arrived when the disadvantages of Government management of the airports have outweighed the advantages? We feel that perhaps the growth of traffic, coupled with the new increase in landing charges, will both tend to place the airports on an economic basis and so widen the opportunities which my hon. Friend wishes to see for examining new methods of management.
My right hon. Friend and his predecessors in recent years have arranged for some of the provincial aerodromes to be taken over by local authorities, and there is a case for continuing this process further: but clearly this would not be a suitable way of providing for the future management of the main international aerodromes like Heathrow or Gatwick. The setting up of a statutory


corporation to operate these and possibly some others as well has many arguments to commend it. I am sure my hon. Friend will understand that I can only say at present that these matters are very much in the mind of my right hon. Friend and that he will no doubt give the arguments put forward by my hon. Friend careful and sympathetic consideration. What form the corporation might take, whether it should correspond to the Port of London Authority or some other body, is, of course, another question. If it should be decided that a statutory corporation offers the best means of managing the main airfields in future, its structure will have to be thought out very carefully, and I am sure that my hon. Friend appreciates that all these considerations will have to be reviewed in some detail.
Now I turn to some of the more specific charges my hon. Friend made on the subject of airport fees, particularly landing fees. The argument has frequently been advanced that our charges are too big compared with those of other countries. I suggest that all attempts at international comparisons in this field are extremely difficult even if not impossible. There is far too much difference in the system of charges to make a really straightforward comparison. I think this is demonstrated by the I.C.A.O. manual on arport tariffs, a copy of which is in the Library. It runs to over 260 pages, and it is studded with qualifications.
Perhaps my hon. Friend has seen the admirable article in the 16th March issue of Flight, which I think disposes of two fallacies. The first is that the fees in London are the highest in the world. This is not so. The second is that all the operator has to pay is the appropriate landing fee. In many cases nothing could be further from the truth. There is, for example the case of Honolulu, to which the article refers. It states that
Honolulu has the lowest landing fee for a Boeing 707/320 of any airport in the world—a mere 14s. 3d., but there is a State tax of 3½ cents per U.S. gallon and a local tax of 3½ per cent. on the basic cost of the fuel, neither of which is refundable. This means that the total cost bill presented for a Boeing which has uplifted 14,000 gallons of fuel is in the region of £246, which makes the 14s. 3d. landing fee slightly irrelevant.
Many other States levy charges which are at present not levied separately in

this country, for example for lighting, cargo service and fuel—not that it is always easy to determine what proportion of the charge on fuel goes into the airport accounts, having in mind the triangle of relationships between the airline, oil companies and the airport—

Sir A. V. Harvey: Will my hon. Friend accept the figure I quoted of £138, which is the average inclusive fee covering all the charges? If not, I will give him the proof from airlines to show him what they are paying.

Mr. Rippon: It is a very good illustration of my point. This comparison with Idlewild is frequently made. As my hon. Friend points out, New York has a relatively low landing fee but has seven separate terminal charges. In the case quoted by my hon. Friend of the Boeing 707/420, it comes to something over £110 basically. Of course, it does not include the charge for space rented by airlines for this fuel storage, and it does not include the charge paid by the airlines to the port authorities of about half a cent per gallon and intplane fuelling charge of 1½ cents per gallon. We do not know what proportion finds its way into the airport accounts—

Sir A. V. Harvey: The difference in the final fuel charge is ½d. per gallon cheaper in London than in New York.

Mr. Rippon: It is not the fuel charge which is relevant but the portion of it that finds its way into the airport accounts.
There is another factor at Idlewild. The charges for passenger ramps and the apron charges can vary widely according to the type of ramp used and the time for which it is used; it can vary from 5 dollars for each 30 minutes after the first free 45 minutes for some ramps to 100 dollars for each 15 minutes after the first hour at the ramp adjacent to the International Arrival building.
In any case, in any attempt at comparisons it is necessary to make many assumptions about the type of aircraft; when the operations occur; the passenger loads, and perhaps, the cargo taken, the length of stay on the airport, the passenger destination, and so on. Differences in these assumptions can produce far greater variations in apparent charges than differences in the scale themselves. For instance, the type of aircraft selected


makes a very great difference. My hon. Friend selected a Boeing, but for a Viscount 806 of maximum weight 64,500 lbs. and an assumed average load of 42 passengers, the total charges after the April increase for an international flight, will amount to just under £39 in the United Kingdom as compared with just over £47 at Idlewild, which also has this fuel levy in addition—

Sir A. V. Harvey: But the British do not fly Viscounts across the Atlantic, so that does not really apply.

Mr. Rippon: But they land there from the West Indies and elsewhere.
All this shows that one has to have regard to the type of aircraft, and also, as my hon. Friend pointed out, to the type of service which is being offered, and the conditions under which the airlines pay for their accommodation; whether they rent it or whether, as in many United States airports, the whole of the building and the management of it has to be provided at the airline's own expense. It is not my purpose, though, to attack anyone else's charges. All I say is that this comparison is very difficult. I.C.A.O. itself tried it, and admitted that it was impossible. It went into the matter in 1956, convening a special conference for the purpose, and came to the conclusion that the standardisation of the actual levels of charges by setting maxima or minima or by any other means is impracticable owing to the widely different situations at different airports.
In any event, I do not think that that is necessarily the best test of whether our policy is right. Charges cannot be considered in isolation but must be regarded as part of policy. If a country decides, as a matter of policy, that it is prepared to subsidise indefinitely its airports, then it can keep charges artificially low. Our policy has been to move towards a situation in which the State aerodromes and the ground services going with them should eventually become self-supporting. I say "eventually" because, of course, hitherto, and still, the taxpayer has been giving very considerable assistance by bearing the difference between aerodrome costs and revenue.
Of course, as the House will know, last year the Public Accounts Committee in its Report, having observed that land-

ing fees were last increased in 1959, endorsed the view that what the traffic can bear by way of landing fees and passenger service charges is a difficult conception which must be tested constantly. It has never been our policy to make one single revolutionary increase in charges. We have gone forward step by step. Experience has been that, as the charges have gone up, the traffic has continued to expand, and we believe that the same situation will apply here.
It is not reasonable to relate this question of charges to efficiency, as some people do. My hon. Friend has not sought to do so. But I do not accept the rather severe criticism which he has made of the services at London Airport. Clearly, there is much which may be done to improve it, and we are paying constant attention to the improvement of passenger handling and the improvement of other facilities. We are carrying out the extension of No. 5 runway and the modifications to the short haul building. The new long haul building will start to come into operation this year. There has been serious congestion in car parking, but it did not show itself until very recently, and the increased charges apply only in the peak summer months when there has been a growing habit for people to leave their cars for long periods of time. Here again, the position will be eased when the multi-storey garage is provided, and we hope to go out for tender very soon.
I do not think the position will be eased by a tremendous increase in private aircraft as, for instance, at Chicago and Idlewild. We should have to have a tremendous increase to make very much difference in revenue.

Sir A. V. Harvey: Executive aircraft.

Mr. Rippon: Private or executive aircraft. Heathrow handles more international traffic than does any other airport in the world, handling about 1 million more passengers a year than Idlewild. We handle them very well, I think. My hon. Friend referred to delays at Customs The average time taken to go through Customs is only about seven minutes.
We are doing what we can to increase revenue in a reasonable way. By any tests which can reasonably be applied,


efficiency has been rising steadily at London Airport and at other airports. For example, per head of staff, between 1955 and 1959 passengers handled increased by 29 per cent. and transport aircraft tonnage increased by 41 per cent. I am confident that we are moving and must continue to move towards the point where our aerodromes should stand on their own feet financially. In the long run, this is, I am sure, the only basis for sound airport management and the long-term prosperity of air transport.

Sir A. V. Harvey: I am sure that my hon. Friend would not wish to go on record as saying that it takes just seven minutes to pass through Customs. That

may be so, but it probably takes 20 or 25 minutes to get to the Customs, and then at peak hours there is a much bigger delay afterwards. Therefore, up to 40 or 45 minutes is taken.

Mr. Rippon: I do not think anyone disputes that at peak hours there is congestion. We certainly hope that it will be eased when the new long-haul building is built and when modifications are carried out in the short-haul building. I was merely answering the point about the delay at Customs, to which my hon. Friend specifically referred.

Question put and agreed to.

Adjourned at five minutes past Three o'clock a.m.